30 American Journal of Transportation American Journal of Transportation ajot.com Bringing the World to Baltimore Bulk, Break Bulk and Project Solutions [email protected] 100+ Years of Maritime Excellence prices, extensive availability, and quality of Canada’s spruce pine and fir whose colder growing cycles make the fibres more pliable and less prone to warping – making them ideal for house framing. The association has seen a 12% decline in Canadian volumes going into the US earlier this year com- pared to last, but most of that has been replaced with Swedish, Austrian and German imports. “Northern wood is still what’s in demand,” Nighbor says. “And Europeans are being favored with flat 15% duties.” Either way, Americans are paying more. Bill Owens, chairman of the National Association of Home Builder (NAHB), has noted the impacts. “Building material tariffs heighten market uncertainty, strain supply chains and increase construction costs,” he says. “As the [US] president continues to advance his tariff agenda, NAHB is urging the administration to exempt building materials in light of the ongo- ing housing affordability crisis.” Nighbor says no one has an issue with the US strengthening domestic manufacturing but says it shouldn’t be at the detriment of successfully integrated supply chains. “My hope for the industry on both sides is that we get back to talking about a stron- ger North American economic power- house, because we’re both facing big issues as a continent,” he says. Shared issues include more chal- lenging forest fire management, soft overall wood-product markets, and declining pulp demand. “Pulp mills going offline is bad news for the saw- mill operators who sell their chips to them,” Nighbor notes. Opportunity exists for both sides of the border, Nighbor insists, if focus is placed on encouraging more building with wood, rather than allowing steel or cement to assume that business. He also says the North American market should prepare for when European pro- ducers may redirect supplies to rebuild in Ukraine and the Middle East. Stumped by Stumpage A core trade issue remains stump- age rates. In the US, where almost 60% of forests are privately owned, prices are determined by competi- tively open markets that promptly respond to market demand. In Canada, where upwards of 90% of forested land is publicly owned, each province/territory has its own formula for establishing stumpage rates. The formulas are based on residual value – factors that include the type/quality of wood, forest management costs, road building requirements, and harvesting expenses – along with recent market averages. These rates are reviewed monthly in some cases, quarterly in others. The US side contends the slower market adjustment give Cana- dian producers the advantage prices spike. Canadian producers counterar- gue that fees align with market trends, noting that previous rulings under the North American Free Trade Agree- ment (NAFTA) and World Trade Organization (WTO) determined that Canadian softwood lumber isn’t unfairly subsidized. Even if Canada were to change how it determines stumpage rates, the American industry wants most imports to cease. “The Pacific North- west and the Northern states can just as well produce the spruce pine fir that’s grown in Canada,” Dane main- tains. “And Georgia pine is gaining traction within the housing industry.” The council doesn’t envision wel- coming imported dimensional lumber unless US housing starts skyrocket. “A game-changer would be if mort- gage interest rates went back down to 3%,” Dane says. Dane notes that most US lumber mills are operating at three-quarters capacity and could easily ramp up pro- duction, especially with the president’s executive order in March increasing domestic timber harvesting across 280 million acres of national forests and public lands. The planned expansion has been met with strong opposition from wildland firefighters, scientists, clean-water advocates, conservation- ists, as well as millions of US citizens and could become an electoral issue. Dane counters that recent forest fires have been intensified by an overabun- dance of natural biofuel arising from insufficient harvesting. Pulp Demand Down Declining new pulp demand is a continental issue. “Like Canada, the US has had a rash of mill closures, including some dimensional lumber, but mainly pulp and paper,” Dane says. “You cannot productively run lumber mills without having a market for pulpwood,” Dane explains. In the US, last year’s recy- cling rates for paper and cardboard remained steady at 61-65% and 70-75% respectively, according to the American Forest and Paper Associa- tion (AFPA). Dane says companies still using new pulp are importing it at lower prices from Canada or Brazil. In Canada, the overall recovery or recycling rate for general paper and cardboard products is approximately 70%. Pulp mills have closed or idled across the country. For example, while Ontario historically counted upwards of 20 pulp-and-paper mills, it’s down to three. The industry in both countries is dealing with the challenges of aging equipment and a lack of newly inte- grated technologies. “That’s where new mills in Brazil are gaining advan- tage,” Dane says. Anger has grown in Canada about prominent mills closing or idling operations shortly after receiving provincial and/or federal support to expand or maintain operations. At least 21 mills have closed in British Columbia alone since 2023. In the US, at least 31 wood-using pulp mills have closed since 2019. Dane accuses some corporations of running operations into the ground to have the excuse to shut down. He says investment and innovation is coming instead from private enterprises, such as RoyalOMartin. “I recently toured (DIVIDED – continued on page 34) (DIVIDED – continued from page 28)
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