"Log run" means you're buying whatever comes out of the log, irrespective of grade. The issue, obviously, is the quality of the logs you're buying from. Because there is no explicit guarantee of grade, some unscrupulous types will use "log run" as a cover to dump crappy lumber from low grade logs. I'd be very careful buying lumber under this specification unless you can look at it for yourself, or know the sawyer.
On the other hand, this can be a great way to save money on lumber if it's done right. For example, the Amish mill I do most of my business with doesn't deal much in grade lumber because they don't have the market. However, they do have access to grade logs and will saw them if they have a customer. The problem is that they don't have any use for what remains after someone picks through the lumber and takes all the prime material. As a result, they have to charge more to cover the loss.
When I have them saw grade logs for me, I agree to buy everything that comes out of the logs. Because I know the logs will be of good quality, I'm assured I won't have an excessive amount of low grade material. Because I'm taking everything, the sawyer has no risk, so I basically pay for the logs and their time to saw them (i.e., not much). I came into the walnut for our floors this way -- the sawyer had access to a few cords of lower quality walnut sawlogs and I agreed to buy 1,500 feet log run. I knew the logs were lower quality, but because I was intending to make it into flooring, I didn't care, and I got it for a song (well, a song and a check anyway). I pulled off the grade material and ran the gnarlier stuff to flooring. When I bought the 6/4 cherry for the interior doors, I had him buy the best cherry logs he could find; I paid a slightly higher price for the better logs, but by buying log run I was still able to keep the price down. Stair treads and railing balusters are the destination of the lower grade material in this case.
So, if you know what your getting, and have a use for the lower grade material that comes along for the ride, buying log run can be a good deal. A good (and honest) sawyer should be able to give you an idea what kind of grade distribution you can expect. But it's definitely buyer beware, so go into it with your eyes wide open.
One final thing -- if you buy log run, I'd suggest that you get agreement that unsound material will be scaled out (i.e., unsound areas of boards are subtracted from the total footage). Knotty boards have uses; rotten or shaky material isn't of much use to anyone.
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