Southeast Business Trends
Tariff Troubles, Economic Unease And Alligators With Earmuffs
By Lara Stearsman
Associate Editor
While the Southeastern softwood lumber markets have long recovered from the storm, the shipping proved challenging.
“The markets are split,” reported one Louisiana source. “They’re in pockets so we might see some business come back but there are a few that are slow. Europe remains quiet. We saw a good bit of activity in Asia before Lunar New Year, and the Caribbean has been steady. In the Middle East, there are places that are dead quiet and others with a lot of activity where there’s rebuilding.”
It is a little better compared to six months ago and 98 percent of what they offer is Southern Yellow Pine. They sell 65 to 70 million board feet a year. The other two percent consists of Douglas and Hemlock Fir. “We sell from the SAPs to the craps – the clearest of the clears to the lumber if it was any worse, it would be firewood. We do some big timbers – 8 x 8s, 10 x 10s and 12 x 12s, but not a lot. The tariff situation in Southeast Asia and China is still around for softwood and hardwood. Nobody’s gang busters but it seems like the takeaways are okay and there’s no big panic button,” he explained.
While located in Louisiana, he said they “don’t ship much out of Louisiana, but we do ship out of Baltimore, down the East Coast and out of Mobile.” Even though the “price of fuel has gone down, and the rates have kind of cooled off and ocean freight rates have pretty much remained steady,” rates remain “above where they were pre-Covid level.”
Regarding the ice storm weeks ago, he explained how it affected his business from a supply standpoint. “A lot of our lumber comes out of Central and North Alabama. It caused delays for our hardwood side, too, out of the Carolinas, Virginia, Kentucky and Tennessee. I spent my last two days in various sawmills in Louisiana, and they were all okay but needed an extra hand. There were a lot of people not showing up for work. I think they have labor, just not good labor.”
Southern Yellow Pine seems to reign supreme in the Southeast.
“I was at a yard the other day and should have just been there for an hour but stayed four hours because I had to help them load a container because they didn’t have enough people. It’s not normal for a customer to show up to a supplier like that. I did refuse to get on the forklift, however. I think the company I work for would have a heart attack if they found out I was operating a forklift on somebody else’s yard,” he added.
Elsewhere in Louisiana, the market is “okay and steady” and “better than six months ago,” commented a local source. “Overall, the worldwide economy is improving and the prices on fuel and energy being cheaper could help the market.”
They are “strictly” Southern Yellow Pine, and the product is selling best in 8/4 Prime & Better. “We usually sell SAP grade and Merch and lumber for the Caribbean which is No. 2 Common & Better,” he stated.
They serve importers and wholesalers, who have shared concerns about “competition from different species and other countries,” he noted.
“The labor is terrible,” he said. “Where we are is a very small town — a rural, economically depressed area. There’s not a whole lot of new people moving in here, so we’re recycling the same bunch of people.”
In Mississippi, the market is “pretty flat right now. The weather has had a pretty big impact on it. There isn’t a lot going on,” stated a local representative.
It is a “little worse” for them because “numbers are down. I don’t see that it’s falling apart or has a long-term effect. Overall, we’re feeling positive for the year. A strong housing market, lower interest rates, consumer confidence is improving but it’s going to take something big to shake things back to good, solid footing,” he added.
Like one of the Louisiana sources, they only offer Southern Yellow Pine. “We do anything from 5/4 radius decking to large timbers. We do industrial grade No. 4 and go up to No. 1 Common, which has the most interest right now. The industrial low-grade market is active as well.”
Treaters and contract yards are who they sell to. They do export and “haven’t had any difficulty with that. Everybody feels the same way – that interest rates are too high and that a strong housing market is what we need to start getting this turned around and getting some good numbers,” he said.
It is a “grind” in Florida due to “economic shifts, tariffs and the weather but for the most part, we don’t get winter storms like we did in the Southeast and that really shut a lot of places down. That pushed everything back by a few weeks. The takeaway from the yard was okay. Everything is okay – there’s nothing to get excited about and that’s why I’m saying it’s a grind,” commented a lumber representative, who shared that it “might” be worse than six months ago because of the “pent-up demand but it’s about the same.”
While Spruce-Pine-Fir is their bestseller, they also offer Southern Yellow Pine. The species are handled in 2 x 4 through 2 x 12 and 8’-16’ in all grades — Premium down to economy.”
His clientele consists of Pro-yards and industrial companies who handle crating and packaging. “We don’t export but we will ship to the dock or the border. Everybody is concerned because nobody really knows what’s coming next. We can’t really look too far into the future right now. Everybody is playing the hand they have right in front of them. We just need housing to free up. If it does, there will be a real shortage of lumber in the marketplace. That’s the real kicker to it. Interest rates dropped to 5.9, so that might get some people off the fence. Housing is just locked up right now. I saw a report that said, ‘the number of sellers over the number of buyers is way bigger than it’s ever been before,’” he added.
While he said he didn’t struggle with transportation due to the storm, his customers suffered. “From this location, I ship up into North Georgia, Central Tennessee and Northern Alabama. Yards were shut down and so were job sites, so nothing was being sent out. Crews were getting sent home from the job site and it took a week or two to round everybody up and bring them back. Nobody does anything in the snow in the South. I’m in North Florida and had flurries at my house – that’s not supposed to happen. The alligators had earmuffs on. The labor market is tight but we’re okay.”
