Arkansas timber executive Steve Anthony believes the timber industry is in the best environment he has experienced in his lifetime, with robust prices and surging demand.
Unfortunately, not every timber grower or sawmill owner is experiencing all the benefits of the strong market.
The shortage of truck drivers has resulted in lumber and other wood products languishing on the shelf, said Anthony, the president of Anthony Timberlands Inc. in Bearden.
“[Prices are] the best in my lifetime, and part of the reason is the inability to deliver the product,” said Anthony, an executive at his family’s company since 1986. “We can’t ship our product. Some of those guys are missing out. Some people cannot find trucks at any price. There aren’t any out there to be had.”
Anthony acknowledged the driver shortage problem is not limited to the timber industry. Transportation executives have lamented for years the dearth of qualified drivers, and trucking companies regularly have idle trucks on their lots for want of drivers.
The driver shortage means that the products the drivers would have delivered can’t reach the buyers of those goods. The current housing market is robust, and the demand for increasingly difficult-to-deliver wood products is one of the reasons housing prices have risen.
Demand has driven the price for wood to historic levels.
The price of 1,000 board feet of lumber was $430 at the beginning of the year, a historically strong price, with prices reaching a record high of nearly $640 in May.
For comparison, lumber prices topped $200 in only 14 months in the entire decade of the 1980s and topped $400 in only 14 months in the 1990s. The price of lumber dropped sharply after its May high to $528 per 1,000 board feet on June 19 but closed at $560 on July 3.
Selling lumber is one thing. Getting it delivered another. Anthony said he knows of one sawmill with a backlog in the millions of board feet, lumber lying stacked in the yard. The sawmill can’t sell what it can’t have delivered; if it sells a month later when transportation is arranged, and that coincides with a price drop, then the company has lost a chance at a bigger payday.
Going to Market
A number of factors are driving up lumber prices. Canada has been hit hard by insect infestations and the Trump administration levied a 20 percent tariff on Canadian timber this year. Fires in the West have destroyed forests, and hurricanes last year spurred construction demand along the affected coasts.
In the transportation sector, national and Arkansas unemployment figures are below 4 percent, so there aren’t many people looking for or willing to take truck driving jobs. Some truck driving jobs pay well, but all can involve tough hours and conditions.
Log truck drivers, the men and women who haul the cut timber from the woods to the sawmill, are among the lowest paid of truck drivers. Many wood products are delivered to wholesaler or construction sites by flatbed trucking companies, whose rates have gone up more than 20 percent because of high demand and tighter capacity.
“I know cases of specific mills that have had to curtail operations in probably the most profitable period of time in my lifetime to operate a sawmill,” Anthony said.
“Some sawmills have had to curtail operations for the simple fact they cannot ship their product. They have enormous inventories. That’s one reason prices have spiked. There is a lot of product that is in the pipeline that is sitting in yards. It cannot be transported to the construction sites.”
Anthony said his company contracts with Freer Trucking of Fordyce for its flatbed shipping but is lucky to be able to use rail shipping for a lot of its needs.
Mike Freer, the owner of Freer Trucking, said he has 75 trucks at his company but at least eight are sidelined most days because he lacks drivers.
“We’ve had to turn down quite a bit of work,” Freer said. “There’s a lot of loads not being shipped because of [the dearth of] drivers.”
Anthony said new electronic logging devices to monitor drivers’ work hours have restricted shipping, too. He said that when drivers were given more flexibility, a truck could make five deliveries to Houston per week; now that number is three at best, if drivers can be found.
“The bottom line fact is we have a real problem,” Anthony said.
Companies don’t have a lot of price flexibility when it comes to acquiring the raw materials because most cut contracts cover two years, according to Matthew Pelkki, chairman of the School of Forestry & Natural Resources at the University of Arkansas at Monticello.
The time span gives companies flexibility to move equipment and schedule the best acreage to cut depending on location and weather.
Pelkki said companies are paying less to private landowners for timber rights but that doesn’t affect already-harvested wood. The timber now being cut and manufactured was paid for in 2016.
“Landowners are only getting about half of what they were getting 11 years ago for standing timber,” Pelkki said. “There is some price stickiness because of the supply chain constraint. I can’t say, ‘I need some cheaper lumber today.’ You have contracts for 24 months for logs at a set price.”
Arkansas has focused on boosting its timber industry, especially as national and international conditions have raised demand for timber. Pelkki said Arkansas grows 8 million more tons of pine trees than it harvests, which recent sawmill expansions, openings and reopenings in Arkansas were meant to address.
Producing more wood products will cause more strain because the lack of consistent transport will only be exacerbated, Pelkki said.
“It’s going to make transporting logs even more expensive,” Pelkki said. “We’re seeing the hauling end of things becoming more expensive. The added cost is happening in the transportation of the lumber from mills to wholesalers and building contractors.”
Tyson Foods Inc. of Springdale can raise the price of its chicken breasts to offset rising freight costs, but Anthony said the lumber industry doesn’t work the same way.
“If you’re manufacturing a commodity product you can’t pass that price on,” Anthony said. “You can’t pass that cost on. That comes right out of your pocket. Lumber has a market and its rates [are decided] every day. It doesn’t go up because your trucking costs go up.”