Heightened demand for U.S. logs is leading to a boom in exports at two seaports in the Pacific Northwest.
Nowhere is that more obvious that at the Port of Longview where log exports surged by 256 percent during the first quarter of this year. Between January and March 30, the port exported 92,649 metric tons of logs, as compared to 26,043 tons exported during the same period last year.
If the pace continues, the port will far exceed its projections for log exports for the year, said port spokesperson Ashley Helenberg, adding that the port already has achieved 93 percent of its 100,000 metric ton projection for the year.
Much of the growth in log exports is being driven by increased demand from China.
Tom Leeds, president of Pacific Lumber & Shipping, explained that China started looking for an alternative to Russian logs several years ago after Russia announced it was implementing a progressive tariff on logs that would eventually reach 80 percent. Even though the Russian government has now backed down from its initial plans and has held the tariff at 20 percent, the threat of a higher tariff slashed Russian log exports to China by nearly half.
Today, log producers in the United States and New Zealand are scrambling to supply China with the volume that Russia has lost.
U.S. exporters have been aided by a reduction in charter rates for breakbulk ships. Prior to the stock market crash in November 2008, a good-sized bulk ship chartered for $2.5 million, but after the market collapse, the rate dropped to $700,000, Leeds said.
As a result, Pacific Lumber switched most of its log shipments from containers to bulk ships, allowing the company to sell logs at highly competitive prices. During 2009, Pacific Lumber tripled its log sales to China, and seaports such as Longview and Olympia, which provide facilities for breakbulk log ships, have enjoyed volume surges.
Although the Port of Olympia has not realized the growth that Longview has experienced, it has recorded a 14 percent increase in log exports during the first quarter of this year.
By the end of the year, Olympia expects to export about 100 million board feet of Douglas fir, said Jim Amador, marine terminal director for the port.
No one is quite sure how long the surge will continue. As the economy has recovered, breakbulk charter rates have increased to about $2 million for an appropriately sized ship, Leeds said, impacting the company's ability to compete with suppliers from other nations.
But Amador says that breakbulk rates have not risen as quickly as container rates, so if U.S. companies continue to export logs to China, it is likely that they will continue to use breakbulk ships and the seaports that handle them.
In the meantime, Leeds says that business with his mainstay customers in Japan and Korea continues to be strong. Last year, Pacific Lumber's overall sales were up 15 to 20 percent.
"We're going to do whatever we can to keep steady supply to our customers," he said.
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