COVID-19 has been a game-changer for many industries, not least of which the lumber industry. The Softwood Forest Products Buyer polled wholesalers and wholesale distributors recently to inquire about several business factors, including consumer demand outpacing supply, how fiscal quarters are shaping up and which customers they are serving.
The survey answers from those who responded follow:
Warren Reeves
Wholesale Wood Products
Birmingham, AL
Due to COVID-19, consumer demand for home improvement projects is far outpacing supply. Depending on the item being purchased, we have seen upwards of eight weeks out on products that is typically 1-2 weeks.
We are not allocating our customers’ needs. However, we are trying to take care of the ones that took us “to the dance…” We are responding by hopefully having what they need, when they need it and at a fair price.
Our second quarter was about 20 percent better than the first quarter. Our third quarter is shaping up to be the best of 2020 due to current market conditions.
We supply our customers with Cedar, Spruce and Pine.
Our vendors simply cannot supply enough to meet needs.
We serve the retail lumberyard industry with some big box stores. I try to visit as many as possible as often as possible.
Trina Francesconi
Sandy Neck Traders
South Dennis, MA
Depending on the product, we are typically experiencing a 2-4 week lead time with most of the product we stock and order regularly. We are working hard to be ahead of the curve, encouraging our customers to order in advance and place orders for the upcoming month/quarter, which most of client base has done. We are focusing on taking care of our regular clients first to ensure their needs are met before taking on any new business with high demand items.
Our second quarter far surpassed our original sales projections. 2020 had started strong to begin with, and other than March, which was down for obvious reasons, we have continued to break sales records just about every other month this year. Third quarter looks to close as one of the strongest on record.
We primarily deal in Eastern White Pine and Western Red Cedar, as well as plank and reclaimed floors.
Due to tight availability we haven’t been able to increase our mill volumes to the extent we could if fiber was plentiful, but we have been fortunate to have mill partners that continue to keep us in the fiber we need for our core customer base. We treat our mill partners as we wish to be treated by our clients, giving ample lead times, strong and clear communication and planning ahead so they can coordinate in the best way possible with the current climate.
We find it very important to “put a face to the name,” and make a point to visit our mill partners. In 2020, though it’s been a bit harder to do, we have continued our mill visits. Being on site and seeing how each mill operates allows us to understand how we can better work together, problem solve and determine how we can best serve each other as a vendor and a client.
We sell primarily to industrial manufacturers and independent lumberyards.
Steve Sprenger
Sprenger Midwest Inc.
Sioux Falls, SD
Our lead times vary greatly. We buy mostly by rail from the Pacific Northwest, Canada and Southern mills. Since May when it became apparent that construction was not going to slow down — and the opposite occurred — there was a lengthening of ship times. From prompt to a normal 2-3 weeks, lead times doubled or tripled. By July many of our vendors were off the market. Open market lumber was scarce—with prices increasing weekly if not daily. We have relied on yearly contracts PTS that were set up in December-January — before the pandemic. We thank our vendors that have “honored” these contracts.
We are not on allocation with customers. With the 80-20 rule that we do 80 percent of our sales with 20 percent of our customers, we are trying to supply those 20 percent best we can. We also try to supply the smaller yards who have been loyal. This is a relationship business—people sell to people.
The first quarter of 2020 before the pandemic – our sales tracked about the same as last year. The second quarter started slow in April but accelerated with the market—finishing well above the first quarter and 2Q 2019. Third quarter has been “gang busters.” Remember that commodity lumber prices have more than doubled since April. You can sell half as much board footage with the same dollar sales. We have sold more board footage than 3Q last year—so you can guess what that has done to sales.
Softwood products we supply are: Western SPF, Hem/Fir in framing lumber, studs and MSR; Douglas Fir long lengths, squares and timbers; full line of Western Red Cedar; Pine boards from several sources and Spruce and Lodgepole Pine boards from a key supplier; Southern Pine dimension and treated; Western Fir and Southern Pine plywood.
We believe in partnering! Increasing purchases was possible in the first month or two of the pandemic. Since about May, our preferred vendors have been hit with the same problem all producers are having: Not anticipating the large increase in demand, production breakdowns with workers afraid to come to work, log shortages, and loggers not able to get in.
Big Box stores have seen a surge of do-it-yourselfers off work with home improvement projects—making great profits. This competes for wood for independent retailers and their contractor customers. The supply chain is in chaos.
As a regional Midwestern wholesaler, we have a history of sponsoring lumber and plywood mill trips—primarily to our Pacific Northwest and Canadian suppliers. Since 1989 we have sponsored over 15 such trips – typically, weeklong with a busload of customers. Also shorter trips to Northern Minnesota and Wisconsin to visit other product vendors and a leading siding manufacturer. Education and “Good Will” is what it’s all about.
Do these educational and good will trips ensure supply? Long term, yes. Short term in these chaotic times—probably not.
We believe in 2-step distribution, serving home centers, retail lumber dealers and industrial accounts in seven states in the upper Midwest.
Jim McGinnis
McGinnis Lumber Co.
Meridian, MS
As for our lead times in this time of COVID-19, some items are prompt; others are still 2-3 weeks shipment. We buy a lot of products on annual/price contracts, so we have product coming available every week. On the products we buy on the open market, we advise our customers to plan ahead at least two weeks.
Our second quarter was not better than the first quarter. It was down about 10 percent. The third quarter is shaping up about the same as the second quarter, but with some improvement.
We mainly supply our customers with low-grade boards, timbers and dimension for the industrial market. A small percentage of our sales go to truss manufacturers and retail yards – primarily No. 1 & Better/MSR, BB Plyform, etc.
In regard to being able to increase volumes from our preferred vendors to meet needs, in most cases, yes, we have been able to do that.
In regard to being able to increase our supply chain in this tight market – no, it’s been a tight market.
Our company does make annual mill trips to ensure our supply from mill partners, but many of our suppliers and customers have not allowed visits to offices or mills due to COVID-19.
We serve primarily industrial accounts.
