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Don’t Forget! You Saw it in the
LAYMAN'S LUMBER MARKET BRIEF COMPONENT MANUFACTURER'S EDITION
May 2018 #10226 Page #77
Lumber Briefs Matt Layman, Publisher
By Matt Layman May 2018 Publisher, Layman’s Lumber Guide
Trucking Shortage: Lumber's Summer Nightmare
Trucking Shortage: We lumber types have come toLumber’s expect the unexpected. Summer So now...buckle up for the next 2018 lumber market crisis... Nightmare Hence, there is great value when we can identify, well in trucking...particularly in the southeast where Canadian owned
advance, what the next price manipulating phenomenon might be. 2018 has been a year of looking for an elusive lumber market top. Early in the year I went so far as to call 2018 a e year lumber types the have come to expect the bear market once making spring reversal high. I stick unexpected. Hence, there is great value when by that, however we have new insight into one very critical weestimation...logistics. can identify, well in advance, what the next area of under price manipulating might be. 2018 hassingle been a year In Februaryphenomenon and March, one railroad, the CN, handedly lumbermarket market's rhythmic cycle of looking for up-ended an elusivethe lumber top. Early in thewith year I from British Columbia, an the went shipment so far as disruptions to call 2018 a bear market year creating once making shipment time forwe SPF-W. Eveninsight worse, springunprecedented reversal high. 6-week I stick by that, however, have new there was no rapid remedy. The situation is scabbing over, into one very critical area of under estimation...logistics. though not healed. (Like that analogy?) In February March, onefurther railroad, the CN,delays singleand handedly Lumberand buyers, fearing shipment up-ended the lumber market’s rhythmic cycle with shipment lumber outages, cut short their spring inventory liquidation, disruptions Columbia,Fearing creating an unprecedented bankingfrom a $50British price correction. further logistics snags, 6-week time for SPF-W. Evenpositioning worse, there was no theyshipment began a precautionary inventory in April. Ultimately, the resultiswill be a lumber more rapid remedy. The situation scabbing over,market thoughthat not ishealed. than adequately inventoried at a time when component (Like that analogy?) manufacturers and their lumber purchasing companions would Lumber buyers, fearing further shipment delays and lumber rather be liquidating inventories. But there is more pain outages, cut short their spring inventory liquidation, banking a ahead...not price pain, rather accessibility pain. $50 price80% correction. Fearing further snags, they in began of SYP, the primary specielogistics used to build trusses a precautionary inventory positioning in April. over half of the country, moves from mill to market by truck. At this writing at the will end of theremarket are over loads than of Ultimately, the result be April, a lumber that100 is more assorted merchandise ready to pick up for each flatbed truck adequately inventoried at a time when component manufacturers in service. As ifpurchasing that were notcompanions troublesome enough, May andbe and their lumber would rather June is produce season, which demands service and pays a liquidating inventories. But there is more pain ahead...not price premium for it. The Loads-To-Trucks Ratio is 103 this week.
W
pain, rather accessibility pain.
sawmills have little experience with produce season. In the good old days, a broker could make or break a trade on freight. Trucks were abundant and $1 per mile could easily be 80% of SYP, the primary specie used to build trusses in over arranged, especially if you kept half a dozen owner operators half of theacountry, busy along repeatingmoves lane. from mill to market by truck. At this writing at the end of April,ofthere arewere overunavailable 100 loadsand of assorted Occasionally, the truckers choice merchandise to pick for each flatbed truck service. As after a week orready two, the mill up would threaten to cut the in trader if that were troublesome enough, off unless theynot allowed the mill to ship forMay their and rate,June whichis9produce season, demands service pays a premium times outwhich of 10, made the trade notand worth taking. But nowfor theit. The situation is inverted.Ratio Afterisa 103 decade producers training the Loads-To-Trucks thisofweek. industry to let the mill arrange the trucking, the shoe is on the So now...buckle up for the next 2018 lumber market crisis... other foot. Trucks have sat for weeks this year because the trucking...particularly in the southeast where Canadian-owned mill cannot cover the quoted freight rate. However, if the sawmills have little experience with produce season. customer wishes to send in a truck and pay more to get the In the goodout oldshipment days, a purgatory, broker could make break a trade load that's cool.orNo, its not cool. on It'sfreight. Trucks were abundant and $1 per mile could easily be arranged, predatory. especially if you kept half a dozen owner operators busy May and June promise to complicate shipping just as much along as the winter lane. rail problems. That is why the lumber market a repeating made a mid April rally...precautionary purchasing for inevitable Occasionally, the truckers of choice were unavailable and, trucking delays. The lumber market will likely go in scattered after a week or two, the mill would threaten to cut the trader off directions. Rail car loadings will ship on time while truck unless they allowed the mill to ship for their rate, which 9 times loadings will be delayed. out of 10 made the trade worth taking. Butat now theallsituation This situation has creatednot quite a phenomenon these is inverted. After a decade of producers training the industry to let time high lumber prices...more concern about accessibility the mill arrange the lumber trucking, the shoe is on theisother foot. Trucks than price. That, my buying enthusiasts, the perfect have sat for end weeks because here. the mill cannot cover the storm for the of athis bull year market...right Note that this rate. week However, is the reversal high on the 10-year quoted freight if the customer wishes to send in average chartpay below. wasget lastthe year as out well.of shipment purgatory, a truck and moreIt to load
that’s cool. No, it’s not cool. It’s predatory.
Continued next page (Composite 10-Y ear Average 2016-2017 vs 2017 - Current) Green Zone: Up Trend; Weeks #41-17; #25-33. Red Zone: Down Trend; Weeks #18-24; #34-40. Blue Vertical Line: Current Week.
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Layman's Lumber Guide...Matt Layman, Publisher 905, Belmont, NC 28012and buying advisories that help component A veteran lumberman, Matt Layman publishes Layman's Lumber Guide, PO theBoxweekly forecasts Phone or T ext: 336-516-6684 Fax: 888-811-6917 Email: matt@laymansguide.org Reprint or distribution is unlawful without permission. www.laymansguide.org T ER.com/Laymansguide Join at Matt336-516-6684 Layman on LinkedIn or matt@laymansguide.org. manufacturers save money on lumber purchases everyT WIT day. You can reach Matt
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