Trade Trends | October 2021

Trade Trends is brought to you by ANDY Transport. It highlights notable news and trends in trade, transportation, and supply chain logistics.

The Coronavirus Disease 2019 (COVID-19) pandemic has impacted the timber industry as well as the wood products supply chain unevenly across sectors and regions and has varied over time as the pandemic has progressed.

According to the U.S, Congressional Research Service, the timber industry is a diverse commodity industry, wherein cut trees (timber) are converted to a wide variety of articles made from wood (wood products). In the United States, the largest wood product sectors are lumber, engineered wood products (such as particleboard and fiberboard), and pulp and paper products, such as cardboard, tissue, and printing and writing paper.

COVID-19 has adversely affected demand for some wood products and disrupted wood supply chains. Due to the differing final uses of wood products, impacts have differed greatly across sectors. Overall U.S. demand for timber decreased in early 2020 compared with 2019, as did timber prices, but timber prices began to rise in late 2020 and 2021. Demand for lumber and engineered wood products is primarily driven by residential construction. Early on in the pandemic, producers of these products anticipated a declining housing market and consequently, lower demand. However, demand from the residential construction sector remained strong, resulting in shortages, and prices for some products rose to historically high levels. These price increases raised concerns about the costs of home construction and the effects to consumers and related businesses, although they did lead to increased margins for sawmills. Paper is a diverse sector, comprising products like cardboard, bath tissue, and writing and printing paper, and demand comes from public places (e.g., offices and schools), home use, and shipping. Thus, despite some disruptions to the sector, overall impacts have been minimal. Disruptions to the wood products sector likely will continue until the spread of the virus is contained, and may evolve further along with economic conditions.

Congress in the U.S. has provided $200 million in assistance to specified timber harvesters and haulers through the FY2021 Consolidated Appropriations Act.

Photo: National Geographic

Since post-COVID Reopening, Food Services Face Logistics Problems. 

This past summer, the Wall Street Journal reported that in the aftermath of COVID, many restaurants, chains, and other food services are finding agile logistics to be the long pole in the tent even as they are trying to regain normalcy.  It also substantiates the necessity for logistics leaders to shift their focus from the proverbial manner of just-in-time (JIT) logistics to a new and effective just-in-case (JIC) one.

According to the Wall Street Journal, "suppliers and logistics providers say distributors are facing shortages of everyday products like chicken parts, as well as difficulty in finding workers and surging transportation costs as companies effectively try to reverse the big changes in food services that came as coronavirus lockdowns spread across the U.S. last year."

Photo: The Guardian

“Over the last six weeks, we have seen the market come roaring back faster than anybody would have anticipated,” they quote Mark Allen, chief executive of the International Foodservice Distributors Association, who said that the industry came back too fast and that the surge has logistically been as difficult as the shutdown. He feared that logistics capacity - which could be warehousing, truck space, and other capacities within logistics - may not be there.

This has kept supply chain leaders busy meeting the demands and needs of shippers and other customers to meet their long hauls and last-mile delivery needs.  The demand for transportation and logistics services to serve the food service industry is expected to persist for some time until some degree of equilibrium is reached and COVID settles out. 

Early This Year the Government of Canada Announced That It Is Investing $162.6 Million In the Canadian Food Inspection Agency (CFIA) Over the Next Five Years.

It intends to invest $40 million each year on an ongoing basis to "maintain the integrity of Canada's food safety system, protect the health of plants and animals to safeguard the food supply, and provide ongoing support to Canadian businesses in their export and import activities to overcome pandemic interruptions and global trade volatility."

The government expects their investment to "bolster an already robust and effective regulatory system allowing the Agency to continue to respond effectively and quickly to import and export activities, perform surveillance and digitize forms and documents."

Fish From Alaska, Via Canada, Poses Problems.

The Wall Street Journal reports that wild Alaskan pollock Fish from Alaska is transported from Alaska to the Eastern U.S.  The fish are usually frozen and travel by ship, to Bayside, New Brunswick, Canada. 

Photo: Long John Silver’s

From there, the fish is loaded into trucks, and onto a flatbed railcar.  After going by rail to a border crossing in Calais, Maine, it is intended to reach U.S. processing plants for further distribution to outlets such as McDonald's and others who serve and sell fish - such as fish sandwiches. 

The controversy comes from an older law in the United States called the Jones Act, which requires cargo transported between U.S. destinations via U.S. registered carriers.  The snafu is that the cargo moves from Alaska to New England via Canada.  Shipments are halted as of now and remain in cold storage in Canada until the dispute is settled.  U.S. lawmakers argue that the cargo moves from Alaska - a U.S point of origin, should be transported by all U.S. registered carriers, and not Canadian. 

But those in opposition argue that the Jones Act applies to Maritime vessels and not rail cars.  As the dispute remains, the supply of fish to outlets such as McDonald's (fish sandwiches) and Long John Silvers (fish menu) is thwarted. 

Long Haul Trucks in Canada Are Ripe for Change to Alternative Energy Sources. 

According to the CBC, while most big rigs run on diesel, prototype trucks that run on hydrogen and electric are being rolled out. Their report added that Daimler, the world's largest maker of heavy trucks, started to test a hydrogen prototype long-haul truck last spring, adding that battery electric vehicles "will be the main tool to drive its shift toward sustainable transport."

Photo: Thomasnet

The article points out that trucking plays a vital role in the Canadian economy, with roughly 90 per cent of freight shipments hauled by truck. It is also a source of greenhouse gas emissions.

The Pembina Institute, a clean-energy think-tank, told the CBC that emissions from freight trucks account for over a third of Canada's transportation-related greenhouse gas emissions, counting both long-haul trips as well as the "last-mile" deliveries that bring goods to people's doors.

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