How prices are increasing enormously due to the growing wood shortage
Sectors that make extensive use of wood have seen prices rise enormously in the past two years due to the growing wood shortage. Although the Corona pandemic was initially the main cause, there are now several causes that maintain the shortage. This market situation will certainly continue for a long time to come. So the wood processing industry will continue to be under pressure from the high prices and long delivery times. The entire industry, including pallet companies, must therefore use the available resources smartly and efficiently. Cekamon offers the right solutions for this.
The international wood processing industry is under pressure from rapidly increasing global wood prices. The main cause of the shortage and increasing prices was initially the Corona pandemic. In the first phase, sawmills reduced production capacity due to increasing uncertainty. Shortly afterwards, when it turned out that the demand hardly decreased, it took a long time before the production capacity could be scaled up again. In the meantime, many sawmills had filled the gap with major maintenance activities, as a result of which production machines and lines could not be put into production immediately. In addition, production capacity was reduced due to illness among employees and staff shortages. Shortly afterwards, rapid and unexpected economic growth followed, putting further pressure on the demand for wood. The result: sawmills couldn’t keep up with the demand right from the start of the corona pandemic. This backlog still affects the market to this day on.
Duties on Canadian timber
During the corona pandemic, it was not only the reduced wood production and the economic recovery that caused a major shortage of wood. The Shortage of wood was also fuelled by the United States, which imposed high tariffs on Canadian timber. As a result, both Chinese and American traders focused on European sawmills from May 2020, simply because European prices had become more attractive. This led to a huge increase in the demand for European timber. In combination with the declining supply, the shortage became even bigger, resulting in even faster price increases.
Transport of wood
Due to container shortages and increased freight costs, the transport of wood to Europe has become extremely expensive. These costs are passed on in the wood price. In addition, the continued high demand and regional lockdowns due to corona are causing huge bottlenecks in many ports, causing jams and waiting times. The result is that the sailing time of cargo ships can increase by as much as two to three weeks, and that has immediate consequences for all ports around the world. Despite high efforts to solve the disrupted transport by ship, it will take at least until the end of 2022 before the problem is actually resolved. It is expected that container prices will remain on a high level until then, and that will reflect on timber prices.
Energy costs affect wood price
In addition to the consequences of the Corona pandemic, import duties in the US, disrupted distribution chains and high transport costs, the increased energy prices are now also holding the wood industry in its grip. The high prices for electricity, gas and fuel, among other things, have a direct effect on the wood price. Transport costs have increased even further and production costs are also rising steadily due to increasing energy costs. Initially, energy prices seemed only to have a major influence on price calculations and little on the availability of wood. However, that is not quite the case. High energy prices have led to a run on firewood. This wood often comes from Eastern Europe and Russia, which means that the chain is also overloaded. Besides that, the situation between Russia and Ukraine presents the next challenge.
Recycling eases the pain
Because the situation regarding wood prices and wood shortage does not seem to improve in 2022, Cekamon advises pallet companies to focus even more on recycling. Gert de With, owner of Cekamon, explains: “Pallet companies can still make a lot of profit, especially with the current prices, by reusing pallets and recycling pallet wood”. The reuse and recycling of pallets also contributes to circular entrepreneurship. In the Netherlands, pallet companies are already ahead in comparison with to the rest of Europe. Yet you now see that countries such as Germany, Italy and Spain, where previously mainly new pallets were used, are choosing for reuse and recycling. The interest in our efficient pallet disassembly and repair machines has therefore risen sharply.
PalletSaw and EndSaw
Cekamon markets various solutions with which pallet companies can give their pallets a second life. The PalletSaw, for example, is the perfect solution to efficiently dismantle and prepare pallets for repair. For example, pallets that are no longer usable can be given a second life or the wood can be reused for other purposes. Another solution is Cekamon's EndSaw. This trimming machine is the solution for trimming reclaimed boards with nail residues and give the wood a second life. Cekamon offers the possibility to include these machines in a complete production line. For example, the machines can not only be used as stand-alone machines, but they can also reinforce each other for an even higher efficiency. For example, wood from pallets that have been dismantled by the PalletSaw can be Trimmed directly by the EndSaw. This significantly increases productivity. Cekamon, for example, has all kinds of options and knowledge at its disposal to ease the pain of high wood shortage and prices.
Are you curious about how you can reduce your wood and pallet costs? Please feel free to contact us.