Supply chains, weather and high demand all put pressure on timber supplies

While we continue to see supply shortages and price increases across the timber and building materials market, I would like to give you some background on these issues to help you understand the situation.

  • The port strikes over Christmas 2020 were the first interruption to supply. Boats were forced to other ports, prompting the shipping companies to double their container rates. Our imported goods suppliers copped a massive increase and the first wave of delays hit our supply.
  • Since COVID, we have seen a big growth in DIY home renovation, a rising housing market and very low interest rates. This has prompted a building boom. Our local supply has never been able to fill our market needs without relying on imported product.
  • The bushfires burnt up to 40% of plantation timber in some supplier’s harvest. Then a very wet summer cut production by 10-20% as trucks and logging equipment were unable to enter the forests due to unstable ground.
  • Global demand is probably the biggest factor with price increases (not that we needed any more). Every developed nation in the world has stimulated their economy with grants and funding in the construction industry. With record new home approvals, the rush to secure fibre and log to supply their market has created a bidding war with wholesalers.

I expect to see prices to keep increasing for the next 6 months, minimum. There are massive back logs still to be filled. The American market is just at the beginning of their housing boom.

Things will settle and balance out. We just have to be patient, organised and flexible over the next 6-18 months.

Thank you for your understanding in these unusual times.

For further details and information please email me at  mark@swadlings.net.au

Regards,
Mark Swadling

Timber Importers Federation gives June 21 supply update

I gave you all an update early this month on the timber supply shortages we are having so you have some help with your client conversations. I can give you a further update I have just received from the peak national body that represents timber imports – the Australian Timber Importers Federation (ATIF).

Here is their update in full –

Current timber products supply challenges 

28 June 2021

The purpose of this letter is to provide customers of ATIF member companies with some comments about the present challenging timber supply situation.

  • It should be noted that there is a world-wide shortage of key essential building products.
    • Every building and construction market in the world created stimulus packages to stimulate economic activity post the COVID pandemic.
  • Demand is continuing to outstrip supply in both domestic and international markets:
    • Record new builds in all states of Australia due to stimulus & low interest rates
    • US housing market still needs 5.5 million more units
    • UK and Europe also in peak demand
  • Shipping (sea freight) is continuing to be an importers nightmare:
    • The global situation with a shortage of containers all over the world has caused an internal fight for the shipping lines to prioritize and focus the containers to markets that are paying the freight that is meeting the demand of transport.
    • This is a simple supply and demand situation.
    • What is negative for Australia in this situation is that comparing to China, there are not as many exports from Australia that pay the same amount as China. This means that imports to Australia will have to pay for a potential empty positioning up to China for the shipping line to get the empties to the “right” places (high paying areas)
    • In addition to this all vessels to Australia are basically fully booked on weekly basis and only contracted volume or even more high paying spot cargo get empty containers and space on vessels.
    • The situation in Suez has caused a huge disruption in several trans-shipment ports, including Singapore where basically all cargo moves via destinated to Australia from Europe and China.
    • The delays in South China add to lines scheduling woes as they continue to grapple with long running US West Coast congestion and equipment shortages.
    • Freight costs have gone from $1800 to $6000 per container which is unable to be absorbed by the importer
  • What is compounding the above is that here in Australia, it is estimated that up to 60,000 hectares of softwood plantations were lost during the 2019-2020 summer bushfires, raw material which takes 20-30yrs to grow
  • Banning of round log sales by Russia has put huge upwards price pressure on all logs. It does not matter where product is coming from log prices are up.

ATIF has raised matters associated with current timber supply challenges with Federal Government ministers and is involved in ongoing discussions with officials to identify what might be done to improve the supply of imported timber products into the Australian market.

These supply shortages are putting a huge amount of pressure on the supply chain as whole, as not only Australia but the world is using building and construction to stimulate economic activity post the COVID pandemic.

While this is just a snippet of some of the challenges that importers are facing it is important to understand that these matters are out of importers control, but our members are doing their best to get on top of the current issues.

From the Chairman and General Manager – Australian Timber Importers Federation (ATIF)

www.atif.asn.au

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We hope these updates are helping you get across this challenging situation.
For further details and information please email me at mark@swadlings.net.au

Regards,
Mark Swadling