A dramatic drop in global log prices has impacted on operations in the East Coast region of New Zealand and some forestry crews face a lean Christmas until prices lift again and full production hopefully resumes.
Eastland Wood Council (EWC) chief executive Philip Hope said global economic factors could have major repercussions for the forestry industry while a prominent contractor said the industry was facing “a very bleak year-end. Right now, the forestry industry is dealing with the impacts of a log export crisis that has seen prices plummet,” Mr Hope said.
“The cost of shipping wood to China has almost trebled since January — the result of Covid, increased fuel prices and so on. The slowdown in the China economy extends to the construction industry.
As we speak, 10 percent of the global shipping fleet is sitting in the water off China waiting to discharge and incurring demurrage costs daily,” Mr Hope said.
“Many ports have been shut down due to Covid and the holiday season has added further to delays. These factors have resulted in significant increases to inventory costs and a drop in demand for wood.” Mr Hope said pundits expected the market to recover in the first quarter of 2022. “However, this is little comfort to the forestry industry, which includes everyone in the supply chain. Everyone is facing a very tough time.”
EWC has been in regular contact with member forestry companies and reached out to many contractors and industry stakeholders across Tairāwhiti to help them understand the challenges they face so EWC can help with solutions. “While member forestry companies are doing all they can to retain contractors, at the present time it is uneconomic to harvest, especially the smaller woodlots”.
“We are aware some contractors have received notice to finish harvesting operations, others have been placed on reduced harvest volumes and others have been given notice of an extended break over Christmas.”
In one example, a forestry contracting company with six crews in Tairāwhiti has gone above and beyond what most would do in such difficult times. “Two crews will stop on December 3, two others have been given notice to stop on December 3, but potentially could go until December 17, and two crews remain, but on 80 percent of their usual production — a month’s shutdown for them from December 17 until January 17.”
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