Column
29.05.2018 //
Text:
Kai Merivuori

Trees to trade

Global demand for softwood lumber is strong. Carbon-binding, recyclable, renewable and certified material is a big thing in today’s world of increasingly strict climate policy and the circular economy.

Kai Merivuori
Kai Merivuori - Managing Director of Finnish Sawmills Association

The lumber industry’s output increased to almost 12 million cubic metres in 2017. This remains some way off the record level: in the early 2000s, up to 13.5 million cubic metres of lumber was produced annually. It should be noted that lumber production is now based almost exclusively on Finnish raw materials; when the record was set, two million cubic metres of lumber was sawn from imported wood.

Exports of lumber and planed timber reached an all-time high in 2017, exceeding nine million cubic metres. The value of these exports was almost EUR 1.8 billion. The Finnish market continues to suffer from the modest quantitative development of wooden construction.

The lumber trade is currently split evenly between four market areas: Finland, Europe, Asia, and North Africa and the Middle East. Approximately one quarter of the total sales volume goes to each of these areas. As the years have gone by, Europe has accounted for smaller volumes. The markets in North Africa and the Middle East have suffered from political unrest and plunging oil prices in recent years. In autumn 2017, the market began to strengthen, and this is also expected to continue this year. Export volumes to Asia have increased rapidly in the last five years. Exports to Japan have stabilised at over one million cubic metres, while exports to China have grown from some tens of thousands of cubic metres to more than 1.7 million cubic metres since 2010. China has quickly become the largest export market for the lumber industry.

Lumber production declined in the first quarter of this year by approximately six per cent in comparison with 2016 due to weather-related problems in production and timber management. This year’s exports to China are not expected to reach last year’s levels, but the volumes will increase correspondingly on other markets.

Global demand for lumber is strong. The biggest worry for Finnish sawmills is not market take-up, but internationally weak competitiveness, which is exacerbated by the cost structure in Finland and unfavourable exchange rates.

Finnish exporters are internationally renowned as reliable suppliers. Cost-efficiency and reliability must also be guaranteed in the future. Opening up rail traffic to competition has provided a healthy boost to competition for transportation from factories to harbours. The increased dimensions and masses of heavy goods vehicles have rapidly boosted the efficiency of road transport for wood shipments and for haulage from sawmills to the coast. Digitalisation and closer collaboration between freighters, logistics companies and customers on shipment management will provide new opportunities to further boost the efficiency of the transport chain – from tree to trade.

 It has been a pleasure to observe the Port of Helsinki’s investment in serving the lumber industry. Vuosaari and Loviisa offer sawmills a functional package, both for containers and bulk shipments. However, we should not rest on our laurels: we should continue developing smooth, cost-efficient, disruption-free solutions and alternatives.