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8 CapitalPress.com November 24, 2017 Chinese logging ban to boost demand for foreign timber Competition for logs is strong with domestic sawmills By MATEUSZ PERKOWSKI Capital Press A logging ban in China’s natural forests will likely in- crease its demand for foreign logs, but the impact on the Northwest’s timber market is uncertain. Though the nation will need to import more logs, it’s unclear how motivated Chi- nese buyers will be to com- pete with domestic sawmills, which are currently offering high prices, experts say. “To expand the market, they’re going to have to go head-to-head with the mills,” said Gordon Culbertson, in- ternational business director at the Forest2Market consult- ing firm. According to USDA, a prohibition against commer- cial timber harvests in natu- ral forests — as opposed to plantations — was enacted by China’s government to counter decades of over-cut- ting, contributing to a 5 per- cent drop in its log produc- tion in 2017. Since 2013, China’s log production has fallen from more than 80 million cubic meters to less than 60 million EO Media Group File A front-end loader hauls logs to the edge of the Port of Astoria’s Pier 1 on Nov. 2, 2010. A ban on commercial logging of natural forests in China is expected to increase the nation’s demand for foreign logs. cubic meters, and the logging ban in natural forests is ex- pected to cause shortages for another three to five years, according to the agency’s Foreign Agricultural Service. “There’s definitely in- creased demand from China. Whether U.S. suppliers want to fill that demand depends on their alternatives,” said Kent Wheiler, director of the Center for International Trade in Forest Products at the University of Washing- ton. Ever since excessive log- ging in the headwaters of the Yellow and Yangtze riv- ers was blamed for massive flooding during the 1990s, China’s government has moderated its harvest levels, Wheiler said. The natural forest log- ging ban is the latest exam- ple of China’s growing con- cern about the environment, which the government has been working to improve to avoid upsetting the country’s populace, he said. “They need to do what they’re doing,” Wheiler said. “They had significantly over- harvested.” New Zealand controls the largest share of China’s mar- ket for imported logs at 36 percent, followed by Russia with 24 percent and the U.S. with 13 percent, he said. Culbertson of Forest- 2Market said the strong U.S. dollar and healthy domestic timber market may prompt Chinese buyers to seek logs from Australia and New Zea- land. In the U.S., the log mar- ket has greatly improved as demand for lumber has strengthened. The price per thousand board feet of framing lumber now averages about $440, up from less than $200 during the depths of the financial crisis in 2009, according to the Random Lengths timber industry information service. “There’s a lot of domestic competition for logs,” Culb- ertson said. Even so, China’s demand for logs helps establish a price floor for U.S. timber producers, since the coun- try provides an export outlet even if the domestic market softens, said Paul Owen, president of Vanport Interna- tional, which specializes in log exports. “It will keep prices, par- ticularly in the Pacific North- west, strong,” he said. The Northwest has an advantage in the species it provides to China: Hemlock and Douglas fir that are often used for concrete formwork in the construction trade, Owen said. New Zealand, by contrast, ships radiata pine and New Zealand pine, which are often milled for furniture, he said. “It’s a different market.” Capital Press File Container terminal operations at the Port of Portland in 2015. Monthly container shipping will resume at the port as soon as January under a new agreement with Swire Group. Port of Portland brings back container shipping By MATEUSZ PERKOWSKI Capital Press The small-scale resump- tion of container shipping from the Port of Portland is expected to be an early test of its reconciliation with the longshoremen’s union. If their renewed relation- ship proves workable, the port hopes it will serve as the foundation for larger-scale container exports to East Asia, said Keith Leavitt, the port’s chief commercial officer. “We’re in a very good spot of cooperation with labor. We look forward to proving that out,” he said. Ships from the Lon- don-based Swire Group are expected to begin calling on the port’s Terminal 6 in Jan- uary, roughly two years after the facility was abandoned by other ocean carriers due to 47-2/100 productivity problems. The deal with Swire Group, whose Cathay Pacific division already provides air cargo service at the Portland International Airport, was struck during Oregon Gov. Kate Brown’s recent trade mission to Hong Kong. For years, slow loading and unloading of containers at the terminal was blamed on a dispute between the termi- nal operator, ICTSI, and the International Longshore and Warehouse Union. The Port of Portland termi- nated its lease with ICTSI ear- lier this year, retaking control of the facility. Over the past five months, the port has settled its own legal disputes with the long- shoremen’s union and entered into a memorandum of under- standing about their working relationship, said Leavitt. The Port of Portland and ILWU will work jointly to bring more business to Termi- nal 6 and have agreed to reg- ularly meet about operational issues before they become bigger conflicts, he said. A spokesman for the long- shoremen’s union confirmed the new arrangement and le- gal settlements. For agricultural export- ers, who’ve been hurt by the shutdown of container traffic from Portland, the agreement with Swire Group will pro- vide nominal relief, at least initially. The main outgoing prod- uct will be Western Star trucks headed to Australia, with agricultural goods such as grass seed, straw and forest products supplementing those shipments. Swire’s ships will carry general cargo as well as con- tainers, so they will only have a capacity of about 100 to 200 container per monthly call. To compare, Hanjin — the bankrupt ocean carrier that once served Terminal 6 — handled about 1,600 con- tainers per ship, with weekly calls. “This is a much small- er container volume,” said Leavitt. “It’s a critical first step, but it’s step one of many steps.” At first, Swire ships will deliver containers to Australia and New Zealand, then travel to East Asia to pick up U.S.- bound imports. As the company grows more confident, it may be- gin shipping containers from Portland directly to East Asia — good news for agricultural exporters who must now truck their goods to more distant ports in Seattle and Tacoma. “What we’re hoping is those volumes will build as they establish their market presence,” Leavitt said. “The hope is we’ll be able to build other services with Swire and other carriers beyond that.” While the port’s repaired relationship with the long- shoremen’s union is an im- portant point, the container terminal still faces other chal- lenges. Before it contracted with ICTSI, the Port of Portland was losing money on the fa- cility and subsidizing its oper- ations with land sales. With ICTSI now out of the picture, it must find a way to ensure Terminal 6 remains fi- nancially sustainable. “We need to be able to at least break even,” Leavitt said. “We’re digging deep into that question.” The container terminal is more than 100 river miles away from the Pacific Ocean and can’t handle the massive new ships built by ocean car- riers.