Forestry in Canada: The 3 Logistical Keys for Exporting

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Forestry in Canada: The 3 Logistical Keys for Exporting

02/05/2024

With $17.1 billion of its net trade attributed to the export of forestry products, Canada has established itself as a global leader in the forestry export market. Not only does Canada hold the largest share of the global NBSK (Northern Bleached Softwood Kraft) market, but they are also known as a major producer and exporter of softwood lumber.

The softwood lumber market alone accounts for 20% of Canada’s forest product export value, while their share of the NBSK market accounts for almost a third of the world’s production, and three-quarters of North America’s total NBSK capacity (Natural Resources Canada, 2022).

But why is this important? Because Canada’s reputation and influence within the forestry export industry means you need to work with an expert to take your forestry exports to the next level.

Our teams of global experts, combined with our presence in key regions around the world makes us strong partners for our customers who rely on us to help them find the right approach for their forestry exports.

When exporting forestry products, it’s important to be aware of varying regulations and trade policies between different countries, specific industry regulations, and different import requirements and standards.

In Canada, there are additional considerations to account for when planning your supply chain, such as:

  • The expansive geography of Canada as a country.
  • Increased regulation of the types of lumber that can be exported to certain countries. For example, certain types of lumber are not able to be shipped to some Chinese ports due to lingering issues around the pine beetle infestation.
  • Potential changes in the duty levels for US imports. These changes are caused by disputes around the US / Canada Softwood Lumber Agreement and can alter the distribution of lumber that is shipped to the US compared to international markets.

Where do most of Canada’s forestry exports go?

While there is an increase in the number of forestry exports going to China and other Asian countries, the major markets for Canada’s forestry exports are still the United States and Western Europe.

What challenges does the Canadian forestry export industry face? 

As well as market volatility and fluctuations in demand, which can be caused by external factors, the forestry industry in Canada faces several challenges, including:

The forestry export industry has also been impacted by congestion across supply chains, due to their reliance on rail transportation to bring products to either the US or locally to Vancouver for export to global markets.

Key shifts in the forestry export market

Despite the challenges, in recent years, our experts at MSC have noted some key changes in the forestry export market. Traditionally, Canadian forestry products have found strong markets in the United States and Western Europe, however, this has recently been broadened.

Due to their incredible reputation for high-quality wood fibre products, Canada has been able to expand their export markets into several other countries, including China.

Notably, within the Chinese markets, there has been a remarkable change in lumber exports shifting from low grade timber to higher value products. This is partly due to the collaboration between forest product associations, provincial agencies, and the Canada Wood Export Program which worked towards increasing Chinese demand for higher-grade lumber. Since 2000, there has also been a notable increase in China's demand for Canadian pulp, which now makes up 34% of Canada’s pulp exports.

Similarly, Japanese consumption of high-value wood products and structural lumber for housing purposes makes them an important market for Canadian forestry exports. However, this demand has waned slightly in recent years due to economic conditions and a lack of population growth.

While Canada has been actively seeking new export markets, the United States remains the most significant market. The country’s housing construction market has continued to be a vital source of demand for the forest sector, and this is not expected to change anytime soon.

As lumber is a cyclical commodity, the prices of domestic lumber (particularly in the United States) can affect the proportion of products imported into the United States. For example, when prices are high, volumes of forestry products will be shifted into this market to take advantage of the additional margin that can be generated.

Similarly, the broader macroeconomic environment, such as housing starts in the United States, can also impact the forestry market. Equally, commodity deflation, for example, copper prices, can also have a subsequent impact on lumber prices.

What are the top three forestry products in Canada?

The main sectors that make up the Canadian forestry industry are:

  • Pulp and paper
  • Logging
  • Solid wood manufacturing
Modernisation in the forestry export industry

One of the keys to overcoming the challenges faced by the forestry industry is modernisation. Governing bodies are currently developing a new 10-year framework for forest landscape plans, to transition from a high-volume to a high-value forestry sector. This will be done by reducing the export of raw logs and promoting locally manufactured wood products. There is also a pilot project underway, where pulp mill by-products are being used in asphalt to reduce waste still further. (B.C. timber industry in throes of change, as premier warns of ‘exhausted forests’-The Canadian Press, Owen,2022).

The Canadian Forest Service is also researching the impact of climate change on Canada’s forests, which will help develop sustainable forest policies and management approaches. In some areas, remote sensors are being used to monitor how forests respond to climate variation. This effort to increase understanding is crucial to ensuring the future of the forestry sector.

Read our top tips for forestry exports in Canada below:

  • Understand and comply with import regulations and standards of target markets to avoid delays and complications.
  • Invest in sustainable practices and certifications to meet the growing demand for environmentally friendly products.
  • Develop strong relationships with logistics partners.
  • Optimise your supply chain efficiency by selecting optimum transportation modes.
  • Keep up to date with the latest market trends, changing consumer preferences, and emerging technologies to adapt and seize opportunities.
  • Conduct thorough risk assessments and develop contingency plans to mitigate potential disruptions and delays.
  • Foster partnerships and collaborations within the industry to share knowledge and expertise and address common challenges.
  • Diversify your products (for example, grinding wood waste) to reduce waste.

Ask MSC

Consistency and reliability of service are something we strive for at MSC to keep our customer’s forestry products continually moving throughout the supply chain and avoid costly delays.

To optimise forestry exports, it’s vital to diversify the supply chain where possible. Our range of services, combined with our worldwide office locations and teams of local experts means we can offer our clients the vital knowledge needed to provide advice and consultation to ensure your forestry exports are as efficient as possible.

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