2022 Was Good For Some, Not For Others; ’23 Is Anticipated With ‘Some Optimism’

Share this...

Nyle - NHM - August 2023 Banner Ad 1

In assessing the hardwood lumber export market for 2022, lumber providers participating in this forecast took two approaches. One was to say that this was a successful year. The other was to say that 2022 was a great year until midway, at which point things didn’t go so well.

One participant stated, “We always like to look back on history to help us plan for the future, but our industry has faced many unprecedented events recently, so we have no real track record to gather information from.”

Another lumberman ventured to consider what 2023 might hold. Regardless of headwinds, he said, “We look forward to 2023 with some optimism because we still have a great hardwood resource that people still want, and we have faith that good people will step up to make better decisions.”

Dave Whitten
Dave Whitten

Dave Whitten, Bingaman & Son Lumber Inc., Kreamer, Pennsylvania

While the first half of the year was better than expected, the second half was like a sick joke as consumer demand all over the world imploded. Our exports of various species and products were strong, then fell off a cliff. About 35 percent of our products go to end users, 65 percent to distributors. Generally speaking, inventories are historically low, but still higher than demand. Generally, factories have filled their orders to the end of the year, and simply have no clue what 2023 will be like.

In the last two years, YES we have suffered at the hands of shipping lines’ sudden changes to bookings, vessel space availability, and ocean freight prices. Frankly speaking, the shipping lines on whom the world depends for global trade have come across as bad actors to say the least. Practically every wood and ag product exporter I know has suffered tremendously at the hands of overnight or even hourly changes of vessel space, bookings, and have had to fight demurrage charges that many times were literally caused by the shipping lines. The shipping lines have made outrageous profits. The new Shippers Act of 2022 has given the Federal Maritime Administration some ability to hold shipping lines accountable, but it remains to be seen how much things will improve.

Rather than repeat all of the crises that others likely have outlined, such as the Russian invasion and China’s collapse, we think it’s better to step back from the day-to-day struggles and look at the big picture indicators.

We live in a time where everyone around the world has the same information at the same time and makes the same decision. So, everything everywhere went up dramatically at the same time in 2021 to the first half of 2022, and now everything everywhere is simultaneously dramatically down. “Whiplash” has taken on a whole new meaning. These dramatic changes are out of our control, but we need to understand them to get a sense of what’s likely in the near future.

While we are in the midst of a terrible storm, we strongly believe there are some silver linings for us and our North American hardwood industry as a whole.

First, North American hardwoods are the most economical, available, beautiful, diverse, renewable, and carbon neutral/negative building material than any other, bar none. Our forests are very healthy, provably growing double the volume that is harvested, based on U.S. Forest Service data. In today’s dramatic down market, it’s not that consumers don’t want wood; they’ve just been forced into survival mode by inflation, high interest rates, war in Europe and COVID shutdowns in China. Consumers simply don’t have confidence or disposable income or time to think about buying wood.

Second, these crises are “man-made.” I don’t mean to diminish the seriousness, but to point out that choices were made that got us into this, and choices can be made to get ourselves out of it as well. That may offend some of you, but hear me out. “First world” western nations all decided to print money to create activity to get through COVID and, voila, that set the stage for the dramatic ups and downs we are currently experiencing. Certainly, in the early days of COVID there was a justified fear of an unknown virus, and first-world leaders added monetary liquidity to build confidence. But it’s clear now those leaders continued printing and spending too much, so our economies are in the same boat named “stagflation.” We all have high manufacturing costs and raw materials, against low sales. So, where’s the silver lining? New choices are about to be made in the U.S., China and perhaps in Europe that should bring some clarity to our economies.

I’m writing this before the U.S. elections, so at the time of this publication, which is after the election, we may already start to see the effects of the election. Will a divided government eventually give consumers more confidence?

Earlier this year, the Chinese central government decided on a zero COVID policy that locked down activity. I’m writing this before the Chinese Communist Party conference in November when President Xi will likely be re-appointed president by the CCP. Perhaps we’ll see signs of new actions by President Xi. Will he double down on zero COVID for control, or open up even just a little? Will he do some things that build China’s consumer confidence, or lock it down tighter?

Meanwhile Putin decided to invade Ukraine this spring, but maybe by the time of this publication his or others’ decisions may force some kind of solution. The war seems like a long slug right now, but who knows? Any initiative towards peace will practically immediately build EU consumer confidence above the historically very low confidence level they feel now.

In the midst of the current storm, maybe we’ve all made the same decision at the same time to try to reduce production of grade lumber. The end of the pipeline of kiln-dried lumber is overflowing, but the input side of the pipe is lower. How long can that imbalance last?

The point is that the stormy waters we have had to navigate will probably be different between the time of this writing and time of this publication. These changes are likely to create even more swings in supply/demand. Those swings will probably occur fast and strong, because again, everybody has the same information at the same time, and makes the same decision.

Nonetheless, we look forward to 2023 with some optimism because we still have a great hardwood resource that people still want, and we have faith that good people will step up to make better decisions.

2022 Was Good For Some, Not For Others; ’23 Is Anticipated With ‘Some Optimism’ 2
Joe Gori

Joe Gori, Lawrence Lumber Company, Maiden, NC

2022 definitely had a great start but started taking a drastic turn towards the end of the 2nd quarter; prices started to crumble and fell very fast.

We expected prices to start falling sooner or later as they went up to record highs in 2021, but they fell much faster than anticipated. Every week we saw it falling, and you find yourself with high-cost inventory that now you are having to sell at lower prices if you want to be in the market.

At the same time exchange rates with the EU and UK began to be a negative effect for the export market as the dollar is gaining strength and creating difficulties with our export customers as that is going against them.

To keep going with challenges let’s not forget freight, especially domestic freight. The cost from our yard to the ports is greater than the ocean freight to Europe or Asia, and that is also making prices higher.

So, if you see it all in a big picture, prices are falling, freight is increasing; what more challenges can we face?

But at the end, everything will stabilize, and it will begin to take shape, so it’s always like this; if there is a big increase go ahead and plan for the decrease.

The Poplar is our “Bread” quick turn-around, always requested everywhere, but this year despite the price fall, Hickory has been a strong one, and a great one for us. We have great sources and the prices have been pretty stable.

Our ripping and surfacing line has also been a great addition for us. We are using it very often and have a new customer base that buys Surface and ripped lumber, so this has been helping us a lot and customers have been liking our production.

As mentioned, the transportation for inland has been difficult, more for the prices that are very high, but availability is ok; we are able to get trucks every day.

The ocean freight instead has been much better. Quicker services and booking are not rolling as much as they were, so that’s good and stable. So, we hope this keeps going. I’m not trying to be pessimist but I’m sure rates will definitely increase soon.

The only thing about exporting that worries me are the exchange rates due to a strong dollar. I believe there will be orders to export but not as much volume. They will buy what they need, instead of taking an extra container to have in stock.

Brandon Clark
Brandon Clark

Brandon Clark, Clark Lumber Company, Red Boiling Springs, TN

The first half of 2022 was just as good as 2021 but it has been all downhill since July. We are seeing less and less demand for lumber primarily overseas, but domestic demand has slowed also. Export freight is a major challenge at the Nashville rail yard which is another added challenge. In order to have a successful remainder of this year and 2023, we have to have a steady demand for the grade lumber that is being produced.

Domestic distribution is the strongest sector we have been selling to with domestic flooring coming in second. Cross ties and cant customers have been steady as well.

A new Cleereman carriage was installed at one of our locations to replace the older one that had been running for 20 years. The upgrade will increase production by 5-8 percent without adding any employees. This will improve efficiency for that location. Two new Hurdle mills are being installed at other locations to replace older equipment there also.

Having enough employees was a struggle for 2021 and the first half of 2022 but it does seem to be getting better now. We are fully staffed at each location.

In transportation, the entire process of trying to get containers and then get them to the rail and the boat has been extremely challenging for the last two years.

Current and expected tariffs would probably finish off what is left of the export market we have now.
Wendell Cramer, W.M. Cramer Lumber Co., Connelly Springs, NC

The first part of 2022 was exceptional with prices going up and from August until now going straight down, so overall a good decent year.

The first part of the year everything was selling well except Red Oak and Cherry and now everything is pretty slow.

Having enough employees is a big problem. We are just going slower on everything.

In transportation and shipping, prices were so high early this year. They have now come down in trucking and water freight. Export shipments need to pick up so customers can share better prices on shipments.

2022 Was Good For Some, Not For Others; ’23 Is Anticipated With ‘Some Optimism’ 3
Eric Porter

Eric Porter, Abenaki Timber Corp., Kingston, NH

I believe that 2022 will turn out to be one of the most challenging years in recent memory. We started the year in great shape and continued experiencing record breaking months until about mid-June. Then everything seemed to stop and the “race to the bottom” was on. The rest of the year will be trying to hold on to whatever gains we have made in the previous 18 months. As of this writing I can say that we are hoping that we have reached the bottom as far as pricing goes and we are working to get back to positive numbers by the end of the first quarter in 2023. For 2023 our challenges will be getting the material we need at numbers that work with what we are able to get when the material is through our processes.

Transportation still remains an issue, but we have seen that open up a bit to date and we are hoping to see that trend continue.

Our customers include manufacturers of hardwood products, distribution yards, and importers of American hardwoods. Biggest sellers were cabinet manufacturers, flooring companies, and distribution yards as well as Asian importers.

We installed all new Messersmith boiler controls for our wood waste system in New Hampshire. They are much more efficient and user friendly as well as easier to maintain.

We are constantly dealing with lack of enough labor at both of our plants.

In shipping, the port issues and lack of containers and vessels are big issues for us.

As an exporter, we simply deal with tariffs as they happen. We have kept in touch with our local legislators and use the Hardwood Federation for help and tips.

Bucky Pescaglia
Bucky Pescaglia

Bucky Pescaglia, MO PAC Lumber Co., Fayette, MO

2022 would be considered a very successful year for MO PAC Lumber Co, although the last quarter is looking to be less than stellar. The hardwood market must overcome the uncertainty that is everywhere before it can begin to equal the successes of the past two years. We always like to look back on history to help us plan for the future, but our industry has faced many unprecedented events recently, so we have no real track record to gather information from. We are also experiencing higher production costs from increased wages, insurance, and energy costs that will impact profitability. This lack of certainty is going to create opportunities for some but will likely force others out of business.

Our mill’s production is over 90 percent Walnut, and it has been selling at a record pace for the past two years. We do some Soft Maple, White Oak, and Aromatic Red Cedar and those items moved well through the first three-quarters of the year.

We have increased all of our wages from $4 – $5 an hour in the past year which has helped us stay fully staffed for the better part of 2022, but we continue to struggle with attracting skilled labor.

Domestic truck availability has improved in 2022 but delays are the biggest issue we are having with our exports. Once we finally get the booking in place, nearly every container will get delayed from either schedule change, rail delay, port congestion, ship weight issues, or any number of other “delays” that we are given as reasons. Most shipments are ultimately delayed an average of 30 days from the original ETA.

Tariffs have their place in creating a level playing field with international business, but they can become a political tool that greatly impacts certain industries. They must be handled with tremendous care and planning to avoid disastrous repercussions.

2022 Was Good For Some, Not For Others; ’23 Is Anticipated With ‘Some Optimism’ 4
Jordan McIlvain

Jordan McIlvain, Alan McIlvain Company, Marcus Hook, Pennsylvania

The year 2022 was very successful for us. With strong demand and having a large inventory of African lumber, while overall supply was slower to come in, we were positioned well to move a lot of lumber.

In 2023, with the supply of imports from Africa being slower due to fuel shortages, I suspect there will be price increases and that may mean lower sales if the demand also slows with the looming recession or cooling economy.

Transportation domestically has improved as far as truck availability but since the announcement of cutting oil production by two million barrels I have seen prices increase.

In 2022, we added a new rip saw and replaced the last of our old moulders. We are also replacing our resaw. This will all increase production capacity and quality while decreasing our downtime and lead times.

We have been able to keep enough employees, but the small percentage of positions with higher turnover seems to be filled with employees that are harder to motivate compared to those before COVID.

Rob Paradise
Rob Paradise

Rob Paradise, Devereaux Sawmill, Pewamo, MI

2022 has been a successful year but has slowed down into the last quarter. In order for 2023 to be successful, the overall market and demands will need to bounce back.

Most products seemed to be strong for the first half of the year; RV and flooring have fallen off while cabinetry and millwork have remained stronger, relatively speaking.

Three new kilns adding 180,000 board feet of kiln capacity will be fired up by year’s end.

Having enough employees had been worse but is improving. However, an additional 2-3 people would be ideal.

As for transportation, trucks are readily available.

Lack of a demand and low pricing is currently the biggest issue on the export market.

2022 Was Good For Some, Not For Others; ’23 Is Anticipated With ‘Some Optimism’ 5
Troy Brown

Troy Brown, Kretz Lumber Co., Inc., Antigo, WI

Though there were challenges in 2022, it was successful. We have been able to replenish our customers’ supply requirements and retain our core customers. That always falls in the success category.

Almost all of our customers are associated with the housing industry. Lumber that is manufactured in cabinet components is solid. I think a crucial metric to watch is the impact of interest rates on the housing market. If the fed gets over-aggressive in its policy, there could be some tough sledding for housing and other industries.

We have increased our custom rip services, but we stay steady with our services and products. We believe in staying with what we know and doing it to the best of our abilities.

We are finishing the installation of a new 500HP, high-pressure steam wood-fired boiler and steam turbine. The boiler will allow us to expand our kiln-drying capacity in the future and provide steam for the co-generation of electricity for the kilns and boiler. Additionally, we will produce enough steam for another co-generation unit if necessary.

Like everyone, there are challenges for hiring, but we are 100 percent employee-owned, which helps with retention.

Our biggest issue in transportation is internal. Hiring drivers that can run over the road/log loader is a position that has been open. This becomes more important in the winter months here in the north because that is when our timber harvesting is at its peak.

We favor fair and free trade. In theory, fair trade is unattainable, and free trade is susceptible to unfair trade practices. However, the hardwood industry relies on export markets in the current economic environment. Therefore, back to my first statement, we support fair and free trade.

2022 Was Good For Some, Not For Others; ’23 Is Anticipated With ‘Some Optimism’ 6
Brant Forcey

Brant Forcey, Forcey Lumber Company, Woodland, PA

2022 has been successful for our company. Only disappointment for the year so far has been that we haven’t been able to completely capitalize on the good market because of labor issues.

We are a wholesale concentration yard and also a veneer manufacturer. All of our products from KD rough lumber, to sliced veneer, and also our veneer components operation have been in strong demand equally. Only lately KD lumber has slowed some but our veneer programs remain strong.

Our newest service is our door component product, and we are currently building a 20,000 square foot facility to better serve our customers with those products.

We are in the process of installing numerous end clippers jointers and splicers in our new facility, mainly to enhance our veneer component operation.

We seem to never have enough employees at this point. We have done a lot more local advertising for employment and raised our entry level wage considerably.

Shipping is unpredictable at best right now, mainly internationally. Domestically we are able to get trucks. It may take a day or two longer than we want it to but not nearly as bad as export containers

Tariffs are a very real problem for the future. If the deadline is only extended it won’t solve the problem. We will still have the problem to deal with down the road. We need a clear direction when it comes to the tariffs and hopefully this will happen sooner rather than later, but not likely.

Nyle - NHM - August 2023 Banner Ad 7

By Miller Wood Trade Publications

The premier online information source for the forest products industry since 1927.

Share This
Related Articles
Import/Export Wood Purchasing News
Miller Wood Trade Publications

Lake States Business Trends

Contacts in the Lake States region accounted for average hardwood activity, with many stating they expect supply shortages in the coming months. An Indiana hardwood

Read More »
Import/Export Wood Purchasing News
Miller Wood Trade Publications

Northeast Business Trends

Throughout the Northeast region lumber sources weren’t able to come to a consensus as to how the market was faring, with one source noting that

Read More »
Import/Export Wood Purchasing News
Miller Wood Trade Publications

Southeast Business Trends

Lumber sources that were contacted throughout the Southeast region seemed to be a bit of a mixed bag as two sources noted that their marketplaces

Read More »
Import/Export Wood Purchasing News
Miller Wood Trade Publications

IBS/KBIS Enjoys Impressive Growth In 2024

The Las Vegas (NV) Convention Center recently welcomed the National Association of Home Builders (NAHB) International Builders’ Show (IBS) and the National Kitchen & Bath

Read More »
Import/Export Wood Purchasing News
Miller Wood Trade Publications

West Coast Business Trends

Hardwood lumber suppliers on the West Coast accounted for stable to stagnant market conditions, at the time of this writing. For most in the region,

Read More »