Letter from Ed: Katrina – A Cruel Reminder of Change in our Society
Immediately after Katrina, the softwood market had a rapid price spike because of an overall panic on commodities. Softwood prices quickly subsided from the panic spike. While some pressure in the hardwood industry had subsided a little over the summer, concern over winter supplies was still very real.
By Edward C. Brindley, Jr.
Date Posted: 11/1/2005
Last month Chaille wrote about tipping points that face us in society. Hurricanes Katrina and Rita have been a tipping point for many people today.
Certainly all of us have had a heavy dose of news concerning this year’s devastating hurricanes and their impact on society. Maybe the coverage has been overkill, but all of us can sympathize with the millions of impacted people.
Some readers may be concerned about the impact on our society but may not be aware of how it has directly influenced our industry. Immediately after Katrina, the softwood market had a rapid price spike because of an overall panic on commodities. Softwood prices quickly subsided from the panic spike.
Pallet companies that service the Gulf region experienced a combination of impacts. Some manufacturers and recyclers had more business to stand in for pallet companies that could not function efficiently at the time, while some orders were lost or delayed because of production that was impacted by the storm.
In late September at the Midwest Forest Industry Show, I heard concerns over the impact the storms were having on the logging industry. While some pressure in the hardwood industry had subsided a little over the summer, concern over winter supplies was still very real. In fact, some pallet contacts are expressing serious concern that this winter may even be worse than the last few were. Imagine what it could mean for loggers to leave one region for another.
There is serious concern over loggers being attracted to Louisiana and Mississippi to handle salvage logging situations, somewhat decimating the logging capabilities of the Ozarks and regions adjacent to the Gulf states. While much of the damaged forest is softwoods, mostly pines, the species makes little difference if equipment is shifted along the Gulf from regions that supply significant quantities of hardwood pallet material.
In Mississippi alone, Katrina caused an estimated $1.2 billion in damage to timber. In Louisiana, the losses were estimated at $600 million. Initial estimates in Alabama were 610,000 acres of damaged forests. Many people believe that much of the downed or damaged timber will go to waste, but it will still move productive logging resources into the region. Blue-stain fungus problems caused people to move quickly toward salvage efforts.
It did not take long for salvage wood to pile up. In Louisiana, storage facilities quickly filled up with pine saw timber for sale. Storage yards were established near Bogalusa, La. for rail traffic and near Ponchatula, La. for barge traffic. A hotline was established to register logging contractors who were interested in working in timber recovery and salvage efforts.
Winter is coming, and concern over hardwood pallet lumber supplies is very real. The Northeast has just been hit by very heavy rains. Even in Virginia, where we have been under drought conditions this summer, we have seen heavy rains during the last week. If our forest floors get wet enough, this winter could be very difficult. Any reduction in logging patterns will just accentuate the problem.
The last three years have been the most difficult when it comes to low-grade hardwood lumber supplies. Competing markets will probably continue to be strong. The rail tie industry is expecting more growth through the next few years. Flooring is still strong, both domestic and imported. Recycled pallets have helped relieve hardwood shortages, but core supplies are so tight that many recyclers are beginning to examine the possibility of manufacturing new pallets.
If you missed our audio conference this November 4th on the low grade lumber market and the pallet industry, you can still purchase the CD and accompanying support documents to make a case with pallet buyers about the supply problems our industry is facing. See page 76 for details. This season’s hurricanes should make it easier to sell the supply problem concept.
To close on a different issue, any reader who hunts deer might want to consider entering this year’s "Big Buck Contest." See page 66 for details. We added a youth category this year!
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