The level of BC forest products exports has remained relatively robust over the last two years. In 2012, $10 billion in British Columbia wood and pulp/paper products were sent to export markets according to BC Stats. Together wood (20%) and, pulp and paper (13%) commodities were more valuable than BC’s energy exports (25%). In this BC Shipping News article, a snapshot of some of the market changes, marine, and port-related developments is provided.  The author probes to see what forest industry logistics and distribution challenges may lie on the horizon for BC forest exports.

BC’s forest products export sector had been in the throes of structural change impacting the nature of the global supply chain required to serve customers. The unprecedented downturn in demand due to the 2008 North American financial crisis quickened the pace of the rationalization of production capacity. The globalization of the industry resulted in the emergence of new market opportunities. The most striking example is China’s rise as both a major consumer and exporter of forest products.

The UNECE/FAO Forest Products Annual Market Review 2011-2012 reports that when American requirements for softwood fell in 2008 and 2009, many sawmills reduced their operating rates and log consumption in Canada declined to its lowest level in 25 years. By 2011, the United States housing construction sector was only 30% of the 2005 peak level of over 2 million starts. While US demand has begun to increase it still has not achieved the levels of 2007. However, Canadian exports of sawn wood and logs to China have risen sharply, benefiting the forest industry in western Canada.

BC Forest Products Exports Shipping & Transportation Impacts

The most optimistic scenario for British Columbia forest producers will see the re-emergence of their traditional old growth market in the United States, with a simultaneous robust lumber demand in the new growth markets in Asia.  “Strong market demand, reduced production capacity and a decline in fibre supply leading to higher lumber and log prices has been referred to as the forest products super-cycle since 2008” stated Mr. Paul Quinn, Paper and Forest Products Analysts for RBC Capital Markets. The important indicator to watch for the possible start of such a super-cycle is when U.S. housing starts are on a sustained trend to 1.4 to 1.6 million per year. While not predicting the exact timing of the forest products super-cycle, Mr. Quinn nevertheless remained bullish on the future of BC lumber producers.

External forces have not only transformed British Columbia’s forest products producers and but have also had a knock-on effect on the coastal shipping, logistics, marine terminal, and international shipping practices used by the industry.

Darryl Anderson, Managing Director Wave Point Consulting concludes by stating that those involved in the maritime logistics and surface transportation for BC forest products exports will need to remain nimble and adjust quickly to changes in either the direction or volume of BC forest products exports. A review of some of the changes that have occurred suggests the BC’s ports and marine terminals are up to the challenge. However, questions about the Pacific Gateway’s gateway’s reliability to handle BC forest products exports will quickly arise in the future if forest products rail service issues and car supply are not addressed.