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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.