Southern Stumpin’

No man is an island, and neither is any nation or industry—not even the ones that are on islands. It’s an interconnected globe we all live in; events half a world away can and do impact us, whether we realize it, or like it, or not. The export market to China, for instance, is very important to the bottoms lines of lots of loggers and timberland owners down here in the U.S. South.

With that in mind, I want to consider the Russia/Ukraine situation, our connections to it, and how it can indirectly affect us—beyond just fuel prices.

In condemnation of the unprovoked attack on Ukraine (and no doubt with an eye to PR fallout), hundreds of businesses are leaving Russia, including many in the forest products sector. Tigercat announced via social media post on February 25 that it would be suspending supply of all equipment, components and spare parts to Russia. “Tigercat regrets the negative consequences of this decision on the work of all our dealers and end-users in Russia who are not related to this devastating conflict,” the post acknowledged.

Likewise, Swedish agricultural magazine ATL reports that John Deere, Komatsu and Ponsse have also stopped all deliveries of both new and used machinery and parts to Russian and Belarusian markets.

These aren’t meaningless gestures of virtue signaling, nor are they painless. Taking a stand for freedom and justice comes at a cost. For instance, sales in Russia and Belarus reportedly accounted for 20% of Ponsse’s net sales in 2021. Other companies, like oil/gas giant BP, also stand to take a sizable hit by walking away from the Russian market.

International Paper announced in a press release that it intends to “explore strategic options, including the possible sale, of its 50% ownership interest in Ilim Group.” According to investigative journalist Daniel Connolly, IP has since 2007 been in a 50-50 joint venture with Ilim, a Russian company with close links to Putin and his oligarch allies. They harvest in Russia and export wood pulp, mostly to China.

The Board of PEFC International (Programme for the Endorsement of Forest Certification, an international, non-profit, non-governmental organization that promotes sustainable forest management through independent third party certification) classified all timber originating from Russia and Belarus as “conflict timber,” which therefore cannot be used in PEFC-certified products. Likewise, the Forest Stewardship Council (FSC) has suspended trading certificates in Russia and Belarus, announcing, “Wood and forest products from Russia and Belarus cannot be used in FSC products or be sold as FSC-certified anywhere in the world as long as the armed violence continues.”

Remember that in Russia, there is no private ownership of forestland. Oligarchs close to Putin are behind Russia’s largest logging companies and wood products exporters, according to a report from Earthsight, a British environmental group that has criticized International Paper and other companies with Russian investments. So, again, it’s not just PR or virtue signaling to withdraw; when we do business with Russia, we help fund Putin’s war chest.

From Russia, With Lumber

Russia is the largest forested country in the world, with timber on 45% of its area. They grow a lot of pine, spruce, larch, and cedar. However, studies by the U.N.’s Food and Agriculture Organization have determined that the potential

of Russian forests is underutilized. While containing a fifth of Earth’s forests, Russia has less than 4% of the global trade in forest products. Its timber industry generates about $20 billion per year—compared to more like $200 billion in the U.S. But more than half of our timberland is privately owned; that might have something to do with ours being more productive and profitable.

Still, Russia is a major exporter of forest products (including logs, lumber, pulp, paper and pellets) to the European Union, China, Japan and the Middle East—$12 billion worth in 2021, according to Wood Resources International (WRI). Europe imported almost 14 million m3 of logs and nine million m3 of softwood lumber from Russia and her partner, Belarus, last year, also according to WRI. The European Federation of Wooden Pallet & Packaging Manufacturers says that Ukraine, Russia, and Belarus collectively supply much of Europe’s softwood for pallets and packaging. Russia also exports a lot of paper to the EU.

Between the war and sanctions from governments and the private sector, observers expect a significant disruption to Europe’s wood supply. Alternative sources in Nordic and Baltic countries will likely not be sufficient to compensate for the shortfall. Russia’s former customers will be forced to import from other sources, opening up potential new export opportunities. Meanwhile, these additional restrictions on an already strained supply chain could cause further price increases.

Speaking of price increases: fuel prices were already going up, along with everything else worldwide. That inflation has now been exacerbated. The U.S. only got something like 2% of our supply from Russia, but the EU has reportedly been importing 41% of its natural gas and 27% of its crude oil from Russia.

Food prices are also impacted; Ukraine supplies the EU with almost 60% of its corn as well as livestock grain. Russia is the world’s biggest exporter of fertilizer (shipments now suspended) and also a major wheat supplier.

Together, Russia and Ukraine are Europe’s breadbasket, but more than Europe will be affected. In terms of exports worldwide, almost 30% of wheat, 20% of corn and over 80% of sunflower oil come from Russia and/or Ukraine. In fact, if estimates from the

International Food Policy Re search Institute are accurate, 12% of all food calories traded in the world come from those two countries.

With the devastation of Russia’s attack,

Ukraine’s crop for this year is probably already lost, so food supply worldwide will be impacted for years to come. In a March 5 article for Business Insider,

Natasha Dailey wrote that “Lumber prices are continuing to surge amid Russia’s invasion of Ukraine, and traders could soon see even bigger price swings. Futures have been on a wild ride since the onset of the COVID-19 pandemic. After tumbling through the spring and summer, they have been rebounding and got a fresh jolt from Russia’s war.”

In a March 10 article for Woodworking Network, Larry Adams reports, “Since Russia invaded Ukraine, lumber prices have jumped 14% to $1,452, putting them just below the all-time peak of $1,711 per thousand board feet recorded last May, according to a report in Market Insider and other publications. Even before the war began, lumber prices were volatile. In January, they fell 15%. Since February 1, they’ve soared 55%.”

Dailey notes that in an interview with Fox Business, U.S. Rep. Victoria Spartz, a Ukraineborn Republican lawmaker from Indiana, mentioned lumber as one Russian industry Western governments should target for sanctions. “Such sanctions could rattle lumber prices further,” Dailey opines. SLT

By David Abbott

PIAVE, Miss.

Manuel Henderson, 37, may be a young man as loggers go, but don’t let that fool you. He’s got plenty of experience under his belt, having already been in business under his own name for 17 years, since he was barely more than a kid himself.

Manuel grew up around the woods business, and has spent his life in different aspects of it. His dad, whose company Glen Henderson Logging and Trucking was featured in Southern Loggin’ Times in the early ’90s, has been logging for about 40 years. And the family owns a sawmill, Henderson Lumber in Piave.

Manuel graduated high school in 2003 and went right to work for his dad in the woods. In 2005, he started his own company, Manuel Henderson Trucking, Inc., to contract haul for Glen Henderson Logging.

In November 2019, Glen offered to sell his son one of his logging crews, a clear-cut job he had established for Weyerhaeuser. Manuel took the deal and quickly grew the in-woods operation, adding a second crew in 2020 and more than doubling production.

With his trucks now hauling exclusively for his own two crews instead of contracted out, the different Henderson family businesses in the area are fully separate. Glen Henderson still runs five crews at his company, but Manuel has no plans for further expansion at this time; he’s happy right where he is.

After all, he’s got his hands full enough.

Out Of The Woods

When he’s not logging, Henderson has another full-time job, or more of a life calling, really: tending to the flock he shepherds as senior pastor of his home church, Union Grove Assembly of God. He’s been pastoring since he was 27, right at 10 years now.

“I never knew this was coming,” he says. “All I was going to do was log, and work in the church, but God saw different. He opened the door; my home church was without a pastor, and they asked me would I fill in till someone else came along.” After a while, as things kept going well, the church asked if he’d consider taking the position permanently. He agreed, then went to school in Jackson to get his credentials.

This was the church Henderson

grew up in and has been part of all his life, along with most of the rest of his family. He’s able to balance the responsibilities of his two vocations well; with his crews working close to home and on short hauls, he can juggle managing logging with visiting members of his congregation when they’re in the hospital and other pastoral duties. It also helps that his dad’s timber buyer, Chris Adcock, is the church’s youth pastor.

Henderson preaches at three services a week. He calls Wednesdays a slow day in the woods, allowing him to works on the sermon for that night, and he takes off Saturdays to prepare for Sunday’s services, spend time with family and catch up on visiting.

At home, Henderson is a family man, married with children. He and his wife Ashley have three daughters: Cartiae, 14, Lexi, 12, and Hadley, 9.

Equipment

In the woods, both crews are set up with mostly similar machines. Both run Weiler K560 loaders, one a 2020 and the other a 2022 model. He keeps a Prentice as a spare loader. Crew 1 uses a John Deere 948L-II skidder, while crew 2 has a ’21 Tigercat 632H, the newest ma chine in Henderson’s stable. A second, slightly older 632H, a ’19 model, rotates between the crews, to whichever one is on a longer drag at the time. Both crews entrust felling duties to a 724G Tigercat cutter.

Puckett Machinery (Weiler), Stribling (Deere) and B&G (Tigercat), all in Hattiesburg, are his equipment dealers. Service is good from all the dealers, Henderson says. “I have no complaints on any of them.”

The Hendersons were Puckett customers before Weiler bought Cat’s forestry division; Glen would only run Prentice loaders on his crews. “They’ve been so good, so we just stayed with them,” Manuel says. “We have mostly stuck with Tigercat for skidders, but when John Deere came out with the L series, the salesman got us to try them and they are very impressive,” the younger Henderson attests. “Dad has a few and I have the one. And Tigercat is definitely our preference on cutters.”

With mostly newer machines un der warranty, maintenance and re pairs tend to be routine. Operators grease and change oil during the week, and use some Saturdays to change hoses or catch up on anything that slipped by during the week. Henderson looks to a local mechanic to handle oil changes and tires on trucks.

Speaking of the hauling side, Manuel Henderson Trucking—the logging crews run under it—now features 12 trucks, each assigned to one of the two crews. They are Peterbilt, all except one Western Star, pulling

On crew 1, Phillip Parker operates the loader, Josh Grantham drives the skidder and Justin Brewer mans the feller-buncher. Floater is Matthew Brown, running the extra skidder on either crew. Crew 2 has Jeremy Brewer on the loader, Edward Weaver on the skidder and Darren Woods on the cutter. Truck drivers are Danny Smith, Jason Walley, Heath Brewer, Michael Byrd, William Bond, Channing Walley, Alton Rigney and Tony Allen.

“They’re a good crew,” the logger says. “A lot of them have been here for 15 years, since it was all trucking.” Both crews cut exclusively for Weyerhaeuser; the contract transferred when Manuel took over. Weyerhaeuser has a reputation for strong safety standards, and Henderson says it is well earned. Re quirements include all PPE, including safety vests, glasses and lace up steel toe boots (no slip ons); three points of contact is stressed, and no power saws besides a pole saw are allowed. “They don’t even want you to trim with a machete,” the logger says. “They are the strictest, but it is a blessing. Thankfully, we have had no accidents.”

Henderson holds monthly tailgate safety meetings for both crews and truck drivers, covering three topics at each meeting. The topics come from Henderson, who addresses whatever he thinks needs to be addressed.

Markets

Henderson stays pretty local, harvesting in mostly just three counties: Greene, Wayne, Perry, with a little action in a fourth, Jones County.

On a sunny and warm day in early March, SLT visited both of Manuel’s crews working clear-cut jobs on ma ture planted pine stands not too far from each other. Sometimes they work on the same tract, but most of

the time they stay separate.

“When Plum Creek owned this property, they would do second thinnings, but Weyerhaeuser has done away with second thinnings,” Henderson says. “So now their rotation is about 25 years and they take it down.” These are typical jobs for the crews. They stay in this type of wood all the time, with lots of logs and chip-n-saw in mature stands ready for final harvest. “It’s good because it’s a mixture,” Henderson says. “If logs get tight, we shift to chip-n-saw.” They also have pole sorts, and different separations for logs and chip-nsaw. The loader operators merchandise the timber to its highest and best use based on the market needs of Weyerhaeuser.

Manuel’s brother Jonathan runs Henderson Lumber, which the family converted from a hardwood mill to pine. They also started exporting to China in the last year.

Both Manuel’s crews and all of Glen’s crews haul to Henderson Lum ber, as well as to other local markets. Manuel Henderson Trucking hauls pulpwood to Leaf River in Augusta and chip-n-saw to Interfor in Bay Springs and Canfor in Jackson, Ala. Other primary markets include Hood Industries in Wiggins, Beaumont and Waynesboro and GeorgiaPacific in Taylorsville. The furthest The crews usually produce 100 loads a week each, and hauled a total 7,626 loads (216,512 tons) in 2021.

With everything that has happened in the last two years, it might be surprising to some that logging, for many, has actually gotten better since 2020, with many loggers finding mills wide open, taking all the wood they can get, even paying more to get it in some cases. But nothing can last forever, and the pendulum swings back. Markets are in-between good and bad these days, Henderson re ports. “It’s kind of tightening up on us. We’re seeing quotas now. At our log mills we’re on quota, at our chipn-saw mills we’re on quota. We’re wide open on pulpwood. Usually Feb ruary and March are wide open, but this year it has been dry enough that they have enough wood, after it was extremely wet the last two years.”

The logger continues his analysis:

“Covid kind of slowed things down too. Lumber went crazy high. Mills had cutbacks with workers. But we have been fortunate; it has only just now started slowing down for us.”

With fuel prices skyrocketing in recent months, first from inflation further exacerbated by the instability in global markets caused by Russia’s invasion of the Ukraine, Henderson reports that mills are trying to re spond with fuel adjustments, but it isn’t catching up with the prices. “They give us a few more cents to try to offset it but it has jumped so quick. Fuel is over $5 here and we have never seen prices like that. Back in Katrina it got up in the high $4 range, to $4.85 or $4.90, and that left no extra money after paying your note and insurance. But we were able to overcome that because we were only battling fuel. Now it’s everything.” The logger wonders how long people will be able to keep it up at this level, and he fears it may go higher, maybe as high as $7 a gallon. “The parts situation, we were dealing with that, but this fuel, that has been a game-changer for a lot of people. Here’s the tricky thing: with the mills being full as they are, they’re not throwing out extra money for their logs; why would they? They’re getting all they want.

So now you’re trying to buy timber for the bare minimum they’re paying. So where are you going to get the extra money (to pay for the increasing costs)?”

For Manuel, that’s why he likes working with Weyerhaeuser.

“They’re able to give that extra little bump, because they have all these commitments, they have to get their wood cut.”

Despite all that, logging does look better, he says, if only fuel cost would get under control. There are new mills coming to his area, for one thing: the Enviva pellet plant in

Lucedale and Idaho Forest Group's sawmill in Lumberton. “It’s very hopeful in the future,” he says. “It’s looking good. We’ll haul to that

Lumberton mill. And even now, still, we got quotas but we hit 200 loads just about every week. So it’s a blessing.” SLT

By Patrick Dunning

CARROLLTON, Ala.

While receiving his state’s 2021 Outstanding Logger of the Year award at the Alabama Loggers Council (ALC) Annual Meeting last fall, Steve Lowe kept things in perspective. “I want to thank God because this worked out perfect. We love what we do, living in Pickens County and working with the people we do.”

Steve, 54, and his brother Terry Lowe, 57, owners of Lowe Brothers Logging, Inc., credit their dad, Harold Lowe, with instilling a solid work ethic in them. They remember getting off the school bus and heading straight to the woods with their father when they were nine and 12 years old. “We'd get out of school and think we were going to watch cartoons,” Steve recalls. “But dad said, 'Nah boys, we’re going to load this truck.’ Hard work played a part in it. We enjoyed it then and still love logging now.”

Harold had worked for a construction company in Tuscaloosa before purchasing a log loader with an 8 ft. boom on the truck bed. He skidded logs with Belgian draft horses until buying his first mechanized skidder in 1985. The boys were more interested in the art of timber felling anyways.

When Harold retired in 1992, Steve and Terry founded Lowe Brothers Logging with a single truck and gradually grew the business over the years into a four-man mechanized operation. The company’s single crew doesn’t pursue large production numbers but is well known for its environmentally conscious work ethic in the woods. That was ultimately a big factor that led to them being named Alabama's Outstanding Logger for 2021.

“We get audited every year and they check our SMZs and BMPs and we were commended on it,” Steve says. “When we first started, there weren’t SMZ or BMP regulations. Even though it costs a little extra to do, it’s better for the environment and wildlife. We try to keep debris near the loading deck scattered and do little things to make the tract look better when we’re finished. It gives us more tracts to cut, so we stay busy.”

Steve says Pickens County has always been a logger’s paradise because of its surplus of timberlands accompanied by a handful of pine and hardwood grade mills. The company’s 40x60 shop in Carrollton sits within a 20-mile radius of the eight sawmills to which Lowe Brothers delivers. The brothers have maintained several of the same professional relationships their father cultivated with equipment dealers and landowners, and have now established themselves as one of the state’s top timber harvesters.

Operations

When Southern Loggin’ Times visited Lowe Brothers Logging in February, the crew was conducting a clear-cut prescription on a 60-acre pri vate tract in Pickens County for McShan Lumber Co. Steve and Terry grew up two miles down the dirt road and previously thinned this block with a chain saw and cable skidder 30 years ago, under the Lowes Logging banner when their dad was still in it full time. The Lowe brothers still hang on to the words their father spoke to them as children. “Remember boys, your reputation follows you as long as you live.”

Back then, Harold contracted for Pate Lumber Co., Carrollton, (now Cooper Marine) and worked closely with its owner, Frank Pate. “This is home turf for us,” Steve says. “When my dad first bought his log truck, boom and Belgian horse skid, he work ed for Mr. Frank. All these years later we’re still working for Mr. Frank; he just doesn’t have a sawmill anymore. He owns a lot of land and we do most of the cutting for him because it’s the type of logs McShan wants. They pay the best money.” Pate plans on replanting the 60 acres of harvested pine pulpwood and hardwood and says he’s had good luck with loblolly seedlings in the past.

When Pate Lumber closed in 2006, Lowe Brothers followed one of Pate’s longtime foresters, David Walk er, to McGee Lumber in Alice ville, for which they contract-cut hardwood. After Hurricane Katrina severely damaged 320 million trees along the Gulf Coast in 2005, including large parts of Mississippi of Alabama, McShan began offering stormwood contracts and the Lowes’ accepted a bid.

Lowe Brothers officially became a contractor for McShan Lumber in 2011, working closely with McShan timber procurement managers Grover Allgood and his son, Gee Allgood. It was Gee who presented the Logger of the Year award to Steve at last year’s ALC meeting.

“The Lowe Brothers crew and fam ily have been a pleasure to work with over the last 11 years,” Gee says. “They hold each other to a very high standard of professionalism and work ethic, both in and out of the woods. For us it is reassuring to know that when they are cutting a tract of timber, they will treat the land as if it were their own.”

Steve and Terry target pine and hardwood grade logs in 20-acre sections with some pre-marked 70 ft.

Equipment

Like their father before them, the Lowe brothers run almost exclusively John Deere forestry equipment, with the exception of a Caterpillar dozer. “We’ve run John Deere since we’ve been in logging,” Terry says. “They perform well and we have a good relationship with the dealership.” The dealer in question is Warrior Tractor and Equipment in Northport. “Our dad traded with Mr. Gene Taylor at Warrior and he’s been super good to us. Jimmy Long, our salesman at Warrior, will come by the house and drop off parts on my doorstep.”

Steve adds, “We’re using a loaner loader right now since our knuckleboom has had issues with a bearing; he’s got it in his shop and is letting us use one of his until ours is fixed. He doesn’t mind if he has an extra piece of machinery in the yard. That means a lot to us.”

The brothers replace one tractor at a time. Their newest piece is a ’21 843L-II feller-buncher purchased last year to replace a ’10 643K that had 12,000-plus hours. Lowe Brothers’ equipment inventory also includes a ’16 437E loader, ’03 648G-III skidder, ’12 748H skidder and ’04 Caterpillar D5 dozer.

Lowe Brothers owns three Macks (’00, ’05, and ’07 models) and one ’07 Peterbilt, all pulling Magnolia trailers. Steve prefers older-model rigs, citing easier maintenance.

Engine oil is changed every 300 hours in woods machinery and every 10,000 miles in trucks. Steve and Terry grease trucks and woods equipment weekly and prefer Delo-400 15W-40 across the board. “Delo 400 is what we’ve always run,” Steve says. “It’s what my dad ran and we’ve had good luck with it, so why change.” Anything related to engine overhaul in forestry equipment and trucks, the brothers will haul to Warrior Tractor or their mechanic, Lee Russell, who has been with the company 15 years and spent many nights under the moon fixing equipment with Steve.

“Our equipment is older but in pret ty good shape,” Steve says. “We can do cylinders and that type of stuff but when it comes to the en gine, that’s beyond what we’re trying to do. When this new cutter breaks down or malfunctions, we’ll have to call someone. Newer ma chines aren’t built as hands-on as this older equipment.”

Markets

Lowe Brothers Logging averages 50 loads per week. “We aren’t high

volume but try to focus on doing quality work,” Steve says.

McShan Lumber is requesting 10 in. pine pulpwood tops and no larger than 29 in. butts. Cooper Marine in Carrollton takes some of the Lowe Brothers’ larger logs, accepting 38 in. butts in grade pine.

“(There’s a) big pine and hardwood push going on right now,” Steve reports. “It was so wet last year; we didn’t have a dry spell like we do now. We moved equipment across two counties trying to cut tracts because it was so wet. Wet weather affected our mills some. Most of our sawmills were low on inventory.”

They haul hardwood grade logs to Lewis Brothers Lumber Co., Alice ville, and Noland Lumber, Gordo; pulpwood to WestRock and Georgia-Pacific, Aliceville; and pine pulpwood to International Paper, Columbus, Miss. Lowe Brothers also hauls to Cooper Marine, Carrollton; utility poles to Cahaba Electric Inc., Centreville; and McShan Lumber.

Each member of the Lowes’ crew is from a family with a background in logging. Stephen Posey, 39, load er operator, is married to Steve’s second cousin and has been with the company nine years. Posey’s father was featured in SLT in 1987 in an article dubbed “A Pocket Full of Poseys.” Steve and Terry’s younger brother, Eddie Lowe, operates the skidder and is the only Auburn University fan on the crew. Jamie Stephens, 41, has driven trucks for the company three years and Lowe says he’s a solid mechanic. Bobby Sanders, 31, has driven big rigs since he was 18. Between the two of them, the truck drivers have over 30 years of experience hauling logs. SLT

by Todd Martin, Southern Loggers Cooperative President & CEO

Iwas honored when asked by Clay Altizer and the Forest Resources Association (FRA) to weigh in on the surging fuel prices and the impacts on logging and forest products transportation sectors. Why? Well, it is not because I feel that we are the experts. I readily admit that prior to taking this position with the Southern Loggers Cooperative (SLC) in 2012 that I did not know much about the “fuel” business other than the fact that I had purchased many thousands of dollar’s worth of fuel in my 23-year career in logging, forest products trucking and chip milling leading up to that point. However, during the last 10 years I have learned much about the business side of the fuel industry. That still does not make me an expert. However, with the SLC’s 32 fueling locations across seven states, just a little under 4,700 members, and approximately 55 million gallons of fuel pumped or dropped into members’ bulk tanks predicted for this year, I certainly believe that we have a good feel for what the fuel business is doing, or at minimum, we have a good feel for how prices move. We literally track it daily and our fuel brokers track it hourly.

As a point of reference, let’s look back in time for just a moment. In April of 2018, I was honored to speak at the FRA’s Annual Meeting in New Orleans. On the day that I made my presentation at that meeting, SLC average fuel prices for On-Road and Off-Road fuel were $2.70/gallon and $2.22/gallon, respectively. Just a couple days prior to the 2020 Presidential Election (a very significant date in time) the SLC average fuel prices for OnRoad and Off-Road fuel were $1.79/gallon and $1.44/gallon. Fast forward to the day that I researched our past pricing for this article (3/14/22) and the SLC average prices for On-Road and Off-Road fuel were $4.72/gallon and $4.11/gallon, respectively. In just a short 16-month period, the SLC average fuel prices increased $2.93/gallon for On-Road (164% increase) and $2.67/gallon for OffRoad (185% increase).

So, with that being said, let’s jump into the three questions in the title of this article.

Obviously, the answer to that question is EVERYONE. That certainly works its way right down to the consumer, regardless of whether they are buying lumber, paper, or a box of cereal at the grocery store. However, for the purpose of this article it is the logger and those that transport forest products. They are the ones that we have first-hand knowledge of how much it is hurting. At least 90% of our SLC members are loggers and/or forest products truckers. Why is that important? In a recent Woods to the Mill article by the FRA’s Northeast Region Coordinator Eric Kingsley, he said “As is obvious to anyone in the forest industry, loggers and truckers are the supply chain links that connect the woods to the mill. In FRA’s supply chain schematic, there are a lot of arrows connecting lots of products, but for anything to get from the woods to the consumer, the industry relies on loggers and truckers. If loggers aren’t healthy, it’s hard for any other sector to be healthy for very long.”

Aside from the changes over time that I mentioned above, the upward movement that we have witnessed since 1/1/22 has been at a rate that added efficiencies and fuel adjustments (if actually received) can’t keep up with. Over the past two weeks alone (2/27/22 – 3/12/22), SLC average prices have increased $1.23/gallon for On-Road and $1.09/gallon for Off-Road. Around 50 cents of that increase for our prices took place in one single day. According to a recent survey by the American Loggers Council,

Scott Dan, Executive Director, indicates that just under 50% of those responding to the survey were showing increases at or above 50% in their fuel costs in the first two months of the year. Keep in mind that this was before the invasion of Ukraine by Russia.

Obviously, the rapid rise in fuel cost doesn’t stop with “just” the fuel. It increases every other item associated with operating their business. I encourage you to visit the American Loggers Council web site and view the rest of the survey to see how all costs of operating have changed since the first of the year. Additionally, in our business, we see other issues that only add to the issue at hand with the surging fuel prices. Our Executive VP and COO, Jason Slatten, made the following statement: “When fuel markets go haywire, one of the most common things we see at Southern Loggers stations is the “panic buy” or stockpiling. Because of the lag in our pump prices due to our pricing structure (our direct invoice cost plus a very small markup), we’ll see a few members start showing up with piggyback tanks, drums, buckets, and any other container they can get a drop of that cheap fuel in. Owners send every truck they have, their buddies, cousins, and in-laws to fill up. That reaction to a rising market may seem like a wise one but is actually quite detrimental. Those guys got that cheap fuel stockpiled, but our tank is now empty. The next guy to come in who needs 100 gallons today to run his job is left standing there with nothing and now must find fuel somewhere else, paying Lord only knows what. Naturally, this leads to additional unproductive time chasing fuel and fewer loads to the set and to the mill. On those days when the fuel market is higher than a giraffe’s butt, we’re now left with no option but to purchase whatever we can just to wet the tank. The rub is now members will have to pay for that high day, instead of SLC being able to “sit out” on buying fuel that day and ride our inventory until tomorrow when the market may not be crazy. That’s not always an option, as we have some stations that get a transport load (or two!) five days a week just to stay going. The big takeaway here is that you WILL NOT avoid fuel price increases in an economic and geopolitical climate like we currently have. You may sidestep it for a few days, but not for long.”

This is a question that is often posed to our primary fuel broker, Jamie Landers of FM Fuel and Resources. His answer is the same every single time “If I could tell you that, I would have an entirely different set of friends!” While that is comical, it is very true. Yes, there are speculators that speculate, and predictions made by everyone. However, nobody really knows! Sometimes we all like to pretend that we do, but we do not! In the political climate that we live in, one move by a person, or one word by another can change the whole course of how fuel prices are moving. I mentioned our COO Jason Slatten above. He and I have these conversations on a daily basis. We wholeheartedly agree that from what we’ve heard and read from folks in the fuel industry, we should expect elevated prices for the near future. While we have witnessed some sizable drops in the past five days (3/10 – 3/15), domestic inventory for crude and products is down, as is production. Demand has ramped up now that the country has opened back up and will most likely increase even more once summer comes. Personally, I’m hoping that we/they are all wrong and domestic production goes full steam ahead tomorrow, and friendly foreign countries want to sell us some cheap crude to help us out in the meantime. The question is, in this political climate, will our government allow that to happen? We speculate but do not know that for sure!

I read a quote from a Minnesota trucker in an “As We See It” article by American Loggers Council Executive Director Scott Dane that read, “The prices being paid to loggers and truckers are not keeping up to the increased cost of doing business.” What we have started to see and hear in the past few days is that some consuming mills are providing some flat rate increases and fuel adjustments. While those increases are certainly appreciated, is it enough? Has it been timely? What we here at the Southern Loggers Cooperative truly hope to see is consuming mills and other raw materials buyers adjusting rates closer to real-time. Our professional loggers and truckers need to be compensated for the increased costs they’re incurring, rather than a bump for what’s already past. A financially healthy raw materials supply chain can only be a good thing for the forest industry. Things are tough! Doing business is tough! I would certainly rather write an article that is much more positive. However, I can always count on one of my board members and former Chairman of the Board of the SLC, Greg Williams, to remind me of this: “It’s a fine day for logging!” SLT

This article is part of Forest Resources Assn.’s Woods to Mill series.