Lumber Market Upset?

The tensions of upsets in World Cup soccer matches are enjoyable. Market corrections that create upsets and tension, not so much.

The market adage that “nothing goes up forever” is presently shaping harsh realities in lumber prices. After peaking at $583 June 5th, the Framing Lumber Composite Price in the June 19th Random Lengths Midweek Report softly logged in at $562. Lumber Futures down $120 since the May contract expired (HT: @LumberTrading). Buyers and sellers of wood are experiencing Isaac Newton’s 400 year-old law that “an object in motion tends to stay in motion unless an external force acts on it.” Traders may be wondering what external forces will come into play to reverse the market’s present downward motion. Will it be another summer of devastating wildfires? Curtailed production? Underlying strengths of construction activity? More transportation woes?

In the meantime, we’ll look forward to teeing it up with distinguished representatives from Canfor, Carrier, Conifex, Dunkley, Hampton, Interfor, Millar, Sinclar, and Teal-Jones – all joining local retailers and staff members here tomorrow – for the mighty Dakeryn Golf Tournament at Riverway Golf Course in Burnaby, BC.  — “FORE!!”

The sidewalks were deserted, the lobby was the same;
The place looked dark and dreary, except one window pane.
Behind it sat a weary man, his head held in his hand;
His face was steeped in anguish as he peered across the land.
He saw the blue Willamette that glimmered from afar,
But his mind was sorely burdened by an unsold transit car.

He snapped it up in early May when things were looking right,
And got the mill to ship it, but not without a fight.
It was a steal at seventy-two, his hopes were raised on high;
But lo when first he offered it, the dealers passed it by.
He shrugged and bade the railroad boys to slow her down a twist,
Then doubled up his efforts to get it off his list.

– Excerpt from “The Office Wholesaler
(Author unknown – can anyone identify? circa 197_?)
Hat Tip: Ian White, Dakeryn Industries

Looking for the Leaderboard with Glen Sawkins, Sales Manager, Dunkley Lumber Ltd. (21 June 2018)

Source: NAHB (June 21, 2018)

Live at The Pond: Five Questions for Guillaume Pelletier

Thomas on Dispatch – Guillaume’s 16-month old son

Harderblog recently caught up with reload operator extraordinaire Guillaume Pelletier, Vice President, RCP Transit Inc.
Dakeryn Industries has enjoyed a strong working partnership with RCP Transit since 1995.

1) How have Electronic Logging Devices (ELDs) impacted truck capacity at RCP Transit?
Right now, we’re handling the same volume as we were doing before the ELD – but differently. Drivers can’t lose time anywhere, they’re running like crazy! As soon as they move the truck, the clock starts; they have 14 hours to complete their day (11 hours of driving + three hours work/on-duty). It’s changing the way they’re driving.

2) Changing in what ways?
Before ELD, drivers could stop to eat, take a shower, do maintenance – now they need to sleep 10 hours in a row! I never sleep 10 hours! I used to have 9 out of 10 drivers sleeping in their truck – now I have three out of 12. And we need to pay extra. Truckers are leaving the reload earlier in the morning, deliver by noon, p-up their log and come back home by 17:00/18:00. My mechanic needs to work overnight or on the weekend. I need more trailers since we don’t have anyone to load at night anymore. I had to hire an extra local driver only to deliver all the back hauls. It’s costing big money.

3) In the face of the ELD mandate, what is RCP Transit doing to be a “U.S. truck shipper of choice”?
We have changed the way we dispatch – it’s hard to explain. Overall, improved communication with customers. Our hours of service for truckers have been fully optimized. It’s more work on the dispatch side, but we have good partnerships in place.

4) How about freight rates?
We’ve been running with the same freight rates out of both our reload locations in Coaticook, Quebec and Island Pond, Vermont, for almost five years. But last week we announced higher freight rates effective June 1st. We probably should have increased rates six months ago, but our goal was to run with the existing rates at least through Q1 to accurately determine what was needed. We want to stay as competitive as possible to continue to grow the business – but waiting until now to raise rates has cost us significantly more then I was expecting! With our trucking company, we were probably short $80,000 for the first three months of the year. We were expecting to handle 20% less loads per week, but that never happened. So we’re handling the same number of loads, but driver salaries are up 20%, our insurance costs are up 30%, and fuel is going totally crazy! Unfortunately those expenses are out of our control.

5) Any shipping relief in sight?
There are fewer truck drivers every year. People are desperate for trucks! Right now there is such a shortage of trucks, people are calling us non-stop everyday. You wouldn’t believe it! We cover one out of every five loads we’re offered. It’s not easy refusing business everyday. The worst part is I am losing my broker. And prices continue to climb. For example, Montreal to Plainfield, CT a truckload of steel pays around $2000.00. How can we compete with that?

Related: America doesn’t have enough truckers

RCP Transit’s Reload in Island Pond, VT

Sharpening the Saw

Its been said that there is power in staying connected to other people in your industry. My fifth consecutive B.C. Council of Forest Industries (COFI) Convention, held in Prince George last week, provided again opportunity to return with ideas to sharpen skills and stay abreast of a rapidly-changing lumbering landscape. The listed takeaways include a surprise at how few marketing and sales types were among more than 550 delegates who packed the Prince George Civic Centre for agenda presentations:

-The prevailing politically-charged environment these days seemed to shape tempered viewpoints from panelists on several fronts. Folks looking for Interfor President & CEO Duncan Davies to deliver pertinent softwood lumber dispute insights were disappointed. His confirmation lauding the work the Softwood Lumber Board is doing to grow softwood lumber demand did not excite. Fortunately a pointed question from the audience, asking why Canadian producers would support the SLB when a number of U.S. members are working to constrain market access, elicited topical response: “The tariffs are wrong. Whether or not the economy is helping to soften the blow, the tariffs should not be there. Inspite of trade matters, we need to continue to invest in our biggest market.” From West Fraser President & CEO Ted Seraphim: “Today, we’re not worried about the softwood lumber dispute. But if the market were weaker, we’d all be worrying about it. So we need to grow demand.”

-While there wasn’t a panel discussion dedicated to timely transportation concerns, Federal Minister of Transport Marc Garneau addressed the situation. He said CN and CP need to do better. He pointed to Bill C-49 (Transportation Modernization Act) but his reporting an improvement in railcar capacity for grain fell flat among an audience concerned with lumber shipments. From Beth MacNeil, Assistant Deputy Minister, Canadian Forest Service: “Without infrastructure, there is no trade.”

Jock Finlayson, Business Council of B.C., talked about the uncertain, shifting economic landscape in this province. He referenced the impact of uncertainty on investor confidence and how Canada is lagging in healthy capital formation. He sees little upside in residential construction in Canada, while pointing to “fundamental organic demand for housing growth” in the U.S. 30-39 age group. He suggested recent fiscal stimulus in the U.S. is unnecessary and poorly timed. Presently 300,000-400,000 manufacturing jobs in the U.S. are unfilled.

-According to Paul Jannke, Forest Economic Advisors (FEA), the U.S. labour force is the single biggest constraining factor in U.S. sawmill production.

-It was refreshing to hear from B.C.’s new Minister of Forests, Doug Donaldson, but otherwise nothing noteworthy recorded.

-An excellent presentation by Kevin Pankratz, Senior VP, Sales & Marketing, Canfor addressed export markets and the global outlook. Interesting to learn that the R&R market is bigger than new home construction. Expansive growth in hybrid construction, off-site construction, and building automation in all markets reported. “Governments everywhere will increase focus on green building initiatives to meet emission targets.”

-Most edgy presentation (“Fibre Supply – It Is What We Make It”) goes to Diane Nicholls, now two years into her job as B.C.’s Chief Forester. In the aftermath of the Mountain Pine Beetle, she seemingly referees the constant fight for access to quality fibre, further complicated by the Spruce Beetle presently eating into the midterm timber supply.

-The Forestry Jobs for Today and Tomorrow panel might have been one of the highlights. Best moderator of the convention goes to Sandy Ferguson, VP Corporate Development, Conifex. It was interesting to hear industry (Canfor/Interfor/Tolko/West Fraser) is working to rejuvenate parts of the BCIT Wood Products Manufacturing Program I graduated from, which has been dormant since 2003. From Kara Biles, Manager Learning & Talent, Canfor: “Aggressively advocate for diversity and inclusion in your company; diversity is a competitive differentiator shifting market share toward more diverse companies.” Derek Orr, Business Development Manager, Carrier provided update on planning underway for a Ranger Program aimed at development/training of Aboriginal youth. Lots of sponsor traction for the program including Carrier, Dunkley, Conifex, West Fraser, and Canfor.

Premier John Horgan seemed pleasantly surprised with the warm welcome before delivering his keynote speech Friday morning: “Thank you for clapping.” He deftly navigated the politically-charged minefield.

~~~

At first glance, the 2018 COFI Convention struck me as perhaps being lighter on content in comparison with past years. However, on second glance, it was rich in both content and opportunity, with plenty to digest. As one among four delegates from Dakeryn Industries, I again return from this convention with new and enlightening ideas. For us all, it was a worthwhile time to ‘sharpen our saws’.

Premier John Horgan with COFI President & CEO Susan Yurkovich (6 Apr 2018)

Hijacking Lumber

It happened this week. A semi-trailer transporting product en route from Alberta to Dakeryn’s wood specialties manufacturing plant in Abbotsford, B.C. was hijacked. According to reports, the suspect faces a number of charges, including kidnapping and use of a firearm in the commission of an offence.

He came to my window (waving a handgun).. I had no doubt that he wouldn’t have had a problem shooting me to get out of there.. I was thinking as long as I was doing what he wanted and driving, he was no great threat to me – but it was a long three-hour drive to Kamloops.

Those are the words of one cool trucker, Robert Price. No doubt there will be a full investigation into the suspect’s motive. In the light of ongoing tragedies involving firearms, it seems insensitive to characterize the incident as anything other than another very serious situation. We couldn’t help wondering though, what would drive somebody to undertake such extreme measures aimed at securing Dakeryn’s lumber? And if the kidnapper had arrived at eventual destination, would our fine finished products have also become a subject of ransom? That question was reportedly in our truck driver’s mind too, when he wondered aloud: “How does this end?” Fortunately, the RCMP intervened at a truck stop 175 miles from our specialties plant and, from early reporting, their gunshots were aimed at the truck’s front tires.

Carrier

It’s been said that excellence is the unlimited ability to improve the quality of what you have to offer. Dakeryn’s strong partnered approach in the marketing, re-manufacturing, and distribution of Appearance Grade lumber with western sawmills of excellence is integral to the company’s long association with key producers.

When Carrier Lumber honoured Dakeryn Industries as their “#1 Customer” with a trophy presentation Friday to President Rob Chimko, it reaffirmed the importance of quality as a building block in the lumber industry. As noted on their website, three principles have guided growth for companies associated with the Carrier Group:

  • Innovation in milling technology
  • Community partnerships with aboriginal groups and community stakeholders
  • Responsible management of the forest ecosystem.

Carrier has achieved sound growth over the years by consistently producing high quality lumber, a determination to form long lasting relationships with customers and to provide the best service possible.

Trade Shows Value

As the record number of registrations for next week’s Montreal Wood Convention attests, trade shows are not going away. That’s the conclusion also expressed in an informative post by Tom Oakes in the blog archives at Astro Exhibitions. And we agree. It’s true that in this digital age, that offers 24/7 connection, there is a re-examination of the relevance or value of trade shows and exhibitions.

Top four interesting facts that Oakes points out:

1. Lead generation is the top reason to attend a trade show. Almost 70% of trade show attendees offer new prospects or leads for exhibitors.
2. 75% of trade show attendees travel over 400 miles to attend a show, highlighting the potential international audience you can reach by attending the right trade show.
3. The number one reason people visit an exhibition is to see new products. 92% of all attendees to exhibitions say that their primary reason is to find new products and it has been the same for the last 25 years. This demonstrates the value of an exhibition for introducing your products and services to a potential new audience.
4. Almost 100% of marketers surveyed by the CEIR (Centre of Exhibition Industry Research) said they felt that exhibitions offered unique value not offered from other marketing mediums.

Leaving aside the research and the numbers there is one factor above all else that keeps trade shows relevant. Human interaction. We are in an ever-increasing world of technological advancement and there are more ways than ever to connect with people but one thing that is not going out of fashion anytime soon is the power of making a face-to-face connection. Humans by our very nature are social beings, we crave interaction. We react and interact with body language, able to subconsciously detect the slightest change and inflection in someone’s manner and demeanour. Technology will always struggle to replicate this experience. Trade shows and exhibitions offer the perfect environment to create and nurture business relationships based on the simplest of interpersonal skills.
– Tom Oakes, Astro Exhibitions

Lumber Traders Obsolete?

Time to answer Question Number 7 for 2015: Is information technology rendering lumber traders obsolete?
While it seems reasonable to surmise the pool of lumber traders is getting smaller (consolidations in North America, vanishing lumber agents in China), information technology is not rendering lumber traders obsolete. It would seem that there are intangibles traders bring to the marketing function in the lumber business that, and we might have to agree with Donald Trump here, will always be necessary to fashion an effective deal! In fact the challenge of interpreting change in prevailing market uncertainties is probably greater than ever. Change no doubt calls for ever-shifting adjustments and demands of accommodation which of itself might be said to enhance the opportunities that a good lumber trader offers in today’s lumber market environment.

~Dak the Halls~

First United Church doubles as Vancouver’s Downtown Eastside (DTES) homeless shelter. A recent visit in support of First United, one of several Dakeryn charities (including Downtown Eastside Neighbourhood House, North Shore Crisis Services Society) brought home the realities of daily challenges many on the margins of society face. I had the opportunity this past Sunday morning to listen to Reverend Sally McShane, the minister at First United. Her reflection on recurrent theme that “we are possibility” reinforced an awareness of our own privilege and “possibilities” to make a difference in the lives of the less fortunate.

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With Wendi Lawrence, Building Manager at First United Church Social Housing Society, and Chris Sainas, Dakeryn (Dec 10, 2015)