Forest residues are non-commercial grade woody biomass that is inherently bulky to transport and handle, and is widely distributed.  These characteristics lead to a high transport cost when taking the material from the field to the biorefinery.  However, these residues exist in sufficient quantity such that they could contribute significant amounts of feedstock to biorefineries provided they can be supplied economically.  Increasing bulk density of the material through comminution increases the amount of material that can be hauled in a single load and therefore decreases the transport cost, however there is increased processing cost.  Performing all comminution at the biorefinery provides a centralized operation that can reduce the operating costs.  As well, size reduction at the landing or in the field can offer additional logistics and operating challenges.  This paper compares the costs associated with size reduction at the landing vs. at the biorefinery.  As a longer distance will be more detrimental to higher per-mile transport costs associated with bulky material, the minimum economic shipping distance for chipping is determined.  A sensitivity analysis is used to vary equipment and operating costs within reasonable ranges.