Bundling is a technology used to create a compressed and uniform handling unit from logging residues and other small size energy wood. The bundles may be handled and transported with the same equipment that is used for conventional roundwood. Bundles also offer other advantages such as "cool systems", good storing characteristics etc. This study deals with some advantages and problems of transport and handling bundled small size energy wood as an alternative to chips. Transport cost, from stump to consumer, is calculated. Two types of material were included in the analysis: bundles and fuel chips. Transport alternatives included transports directly to consumer as well as transports of bundles via a terminal for drying and chipping, and then, in the form of fuel chips directly to consumer with a bulk cargo truck. The study shows that bundles (especially if dry) are cheaper to transport than fuel chips in road transport bins. The useful cargo space is the limiting factor for trucks when transporting dry material. Transport cost decreased until the moisture content reached the critical levels, below 40.9% for chips in road transport bins and below 44.7% for bundles on timber truck. However, there are also other advantages with a dryer material. Chipping cost is lowest in the terminal alternative and highest in the system with chipping loose logging residues in the stand. However, transport via terminal sharply increases the total costs, due to handling and increased transportation work, especially on shorter distances. Transport of uncovered bundles on conventional log trucks can be dangerous because of the risk for pieces of wood falling off. Bundles may also disintegrate during handling. The risk increases if the bundles are not reinforced with e.g. long tops and small trees, or if the strings are damaged during storing. Sisal strings deteriorate and lose their strength after a relatively short period. Thus, they are less suitable than strings of, e.g. polypropylene. Cost savings in transport and chipping indicate an allowed cost for bundling of approximately 4-5 Euro/MWh for short to medium transport distances, to be competitive to the chip alternative. Cost estimates of bundling and covering of stacks with paper indicate that the handling cost is about the same as for chips for short to medium transport distances. However, for longer transport distances and through other advantages such as possibilities for return transports, a dryer and more storable material, cooler systems etc. may increase acceptable bundling-cost substantially. (c) 2005 Published by Elsevier Ltd.