Transportation shortages still massively challenge lumber traders
Logistical nightmares and truck driver shortages slow lumber and structural wood panel delivery
Originally published by Fastmarkets Random Lengths, February 9, 2022
Operating for the past two years under the Covid-19 pandemic has presented myriad challenges for wood products traders, but transportation problems have vaulted to the forefront of buyers’ and sellers’ lists of frustrations.
Veteran traders, many who have spent 25 years or more in the industry, have commented that they can’t remember a time when they’ve dealt with more transportation-related headaches.
Whether it’s due to the lack of railcar supply or reduced truckers on the road, getting product to market has been an extreme challenge at all levels of the distribution pipeline. “The logistics nightmare we have keeps getting worse,” said a mill salesperson in Eastern Canada.
The logistics nightmare we have keeps getting worse.
“It doesn’t feel like an end is in sight. It’s been compounded with the bad weather we were having the last couple of weeks.”
Numerous lumber and structural panel mills in Canada have complained recently about the limited number of railcars they are receiving from CN Rail. Some OSB mills have canceled or reduced contracts with customers, with railcar shortages noted as a key problem.
CN Rail issued the following statement this week: “CN remains committed to work with customers and supply-chain partners as recent extreme weather in Western Canada, along with North America wide supply-chain challenges have impacted cycle times for railcars used in the wood products industry. We understand the frustration felt by our customers and we continue to do everything in our power to get their goods to market as quickly as possible.”
With demand often running ahead of supply in many lumber and structural panel products, some mills are adding two to four weeks to arrival times on top of their current order files. “Mills are already three to four weeks behind,” said a wholesaler in the West. “I don’t see any way this gets resolved quickly.”
Some traders have hope that as weather improves railcar supplies will pick up. The long-term outlook regarding the shortage of trucks is more troublesome. “I don’t want to be an alarmist, but trucking is a problem we’ll have to deal with for years,” said a mill salesperson in Eastern Canada.
I don’t want to be an alarmist, but trucking is a problem we’ll have to deal with for years.
The American Trucking Associations (ATA) estimated last year that the truck driver shortage would hit a historic high of over 80,000 drivers. That trend worsened when electronic log requirements went into effect, and it’s shown few signs of abating.
Truck shipments across the U.S.-Canada border have worsened recently with the requirement that truckers show proof of vaccination. Protests have grown regarding those regulations, with blockades snarling traffic in Ottawa and on the bridge connecting Windsor, Ont., to Detroit.
While those are short-term impacts on trucking, the longer-term prognosis is gloomy. ATA projects that if current trends persist, the shortage of truck drivers could surpass 160,000 in 2030.