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Uncertainty of the Timber Market and Soaring Shipping Costs

The timber market is spiralling and has become increasingly uncertain. With rising prices in shipping, longer lead times, and lower stock levels. Those within the industry are struggling to provide any consistency.

 

Timber Shortage

Because of the Coronavirus pandemic, there has been a severe timber shortage. Resulting in an increase in prices, and longer lead times. Coupled with the rising cost of shipping, getting any wood into the UK is very difficult and expensive. With the price of softwood increasing at much higher increments than before.

But this issue has continued into the middle of 2021. With shipping costs still extremely high, and demand heavily outweighing supply, an end to issues cannot be seen.

 

Uncertainty

With stock levels low and shipping costs high, prices for products are changing weekly. Meaning planning ahead is virtually impossible. With some seeing prices increasing by 40% within a week. These increases are being passed down the supply chain, from sawmills to the end customers. But some building site projects can take up to a year to complete so maintaining one price for the whole project isn’t realistic. Those who aren’t involved in the acquisition of timber are now being affected, with knock-on effects for the whole market.

Industry professionals, who have been doing this job for years, and maybe decades, are now unable to price accurately. As things are changing so quickly. Meaning some businesses could experience potential losses. With some panic buying from sources which they wouldn’t normally consider.

 

Shipping Costs and Logistics

Today, avg shipping costs are $18,000. Whereas this was $11,000 only 3 months ago. And some have predicted this will continue to rise to $20,000+ by the end of 2021. Many within the industry have stated that this is the new normal. And that we can expect to see no real changes within the near future. Since there is still such a high demand for shipping containers, prices will not change. We have also noticed a shift in other parts of the world, particularly South America starting to increase their shipping costs. Simply put, when demand is high and supply low, prices will remain high.

In the early months of 2021, there was a huge effort to get large amounts of timber into the UK. But, this effort has meant ports are under tremendous pressure to figure out logistics. Ensuring that there is enough space to allow vessel arrivals in by clearing landed stock quickly.

 

Our position at Think Timber

At Think Timber we talk to our suppliers and customers on a daily basis. Figuring levels of supply and demand. As a business, we have never intended on storing large amounts of stock, as we have such good relationships with customers and work in an agile way. Yet, more traditional companies who are used to stockpiling high volumes, are struggling. To simply adapt to working in a new, just-in-time manner.

Despite this, we have found ourselves in a difficult situation. Reluctantly needing to increase prices in line with our shipping costs. But, we are ensuring to pay close attention to any changes in demand, supply, and prices. Then communicating these to our customers. Although the industry is facing a few issues. It seems that softwood is finally being given recognition as a great, renewable, low-carbon resource.

As a company, we will remain reactive in terms of prices. If we are left in no other position than to increase prices, we will communicate this as soon as effectively possible. Please rest assured that we will try and achieve the best possible prices always for our customers. Although we cannot currently guarantee how long prices issued are valid for. Please be assured we are not about jumping on the Covid-19 bandwagon massively inflating costs with no true justification. It is on a need and must basis.

 

If you have any questions about the UK Timber shortage and shipping costs, please get in touch to discuss these at hello@thinktimber.co.uk

 

Resources used:

The Construction Index 

TTJ Online