Truck, Rail-Car Dearth Adding to Lofty Lumber Prices, CEO Says

(Bloomberg) -- Shipping woes are adding to the high price of lumber, according to one of Canada's leading producers.

A shortage of trucks and rail cars is boosting costs and causing delays in sending lumber to buyers in Canada and the U.S., said Remi Lalonde, chief executive officer of Montreal-based Resolute Forest Products. Most lumber buyers prefer to receive their shipment by truck, but companies are forced to use whatever mode of transport is available to ship timber, even if comes with a higher price tag and longer shipping times, he said.

More than half of Resolute's lumber business is sold into the U.S.

``There are so few trucks available in the Lac. St. Jean area right now that if somebody is buying from us we'll say `I have to send it to you by rail because I have no trucks,''' Lalonde said Thursday by phone, noting available rail capacity in the area has also dropped by about 50%. ``We're building inventory, the stuff isn't moving fast enough and we have to look for alternatives that are costing us more money.”

Lumber prices have been volatile since the pandemic began. They touched record highs amid a Covid-19 inspired building boom, then collapsed because sawmills increased production while high prices stifled demand. Futures rose by the exchange limit of $45 on Thursday, touching $1,024.90 per 1,000 board feet on the Chicago Mercantile Exchange.

Transportation snags have resulted in higher prices for U.S. southern yellow pine since they are closer to truck to some buyers, Lalonde said. Resolute is hopeful some of the logistical “knots” will start to come undone as the omicron wave passes and weather-related disruptions ease, he said.

``I'll take anything I can get,” Lalonde said, referring to transportation modes. ``When there isn't enough equipment to go around it causes disruptions in the system.”