BC lumber companies got good news earlier this month when Canadian National Railway (CN) announced that it had struck an agreement with China’s largest lumber buyer, CNBM Forest Products Trading Ltd., to boost lumber exports to China.
That came on the heels of trade data released in July that showed that the value of Canadian softwood lumber exported to China surpassed the U.S. for the first time in May.
China is now the largest destination for B.C. lumber products – a phenomenon that highlights just how important the Asia Pacific region is for the B.C. economy.
Many headlines have drawn attention to B.C. sawmill workers’ fears that local raw log exports to China will increase.
CN’s agreement with CNBM, however, is said to be about lumber and not raw logs.
Even if some raw logs slip into the mix, it is not a bad thing, according to International Wood Markets Group president Russ Taylor.
“I’m a believer in log exports,” Taylor told Business in Vancouver. “That’s jobs. It’s not a lack of jobs. No one seems to get it. If you didn’t export logs, those logs would be staying in the forest. There would be no logging jobs, no port jobs, nothing.”
Taylor’s consulting company is sponsoring, with the China Timber Distribution Association, a logging and lumber conference in China September 12-16 that will appeal to both owners of sawmills who fear a hike in raw log exports to China as well as North American raw log exporters who are looking for business.
Regardless of whether the bump in B.C. wood exports to China is driven by logs or lumber, it will mean new CN jobs at Surrey and Prince George facilities starting this fall.
“We’re already hiring,” CN spokesman Louis-Antoine Paquin told BIV August 12.
He estimated that CN would hire 14 new staff at Surrey’s Thornton Yard, which currently has 453 staff. CN will also hire 25 new employees for its Prince George facility, which currently employs 32 staff.
“The number of new hires could increase depending on the volume,” Paquin said.
CN’s plan is to transport lumber, mostly by truck, to either Surrey or Prince George. The lumber stored in Surrey will then be loaded on ships at the Port of Vancouver and sent to China.
Other lumber will flow first to Prince George and then be sent on rail lines to the Port of Prince Rupert, 720 kilometres west of Prince George.
CN has owned Surrey’s Thornton Yard for many years and operated it mostly as an intermodal facility.
The agreement with CNMB will require CN to use an initial eight-acre footprint at Thornton Yard that was previously unused.
While growing exports to China is desirable, the U.S. and Japanese markets are the most profitable destinations for B.C. wood, Taylor said.
“China buys low-priced commodities. It’s the highest-priced market for low-grade lumber because that’s what they want. So, we’re getting a reasonable return on our low-grade lumber,” Taylor said.
B.C. has slowly been increasing the amount of mid-grade lumber to China, and Taylor expects that to increase.
“Japan pays the highest price for the highest quality, but there’s only so much of that which we can produce,” he said.
Taylor expects B.C. lumber shipments to Japan to increase next year.
Currently, there’s a glut of plywood in Japan because, in the wake of the earthquake and tsunami, there was what Taylor calls “panic buying” for plywood to board up buildings.
The enormous rebuilding effort will require lumber in 2012, he added.
Wood products, such as lumber as well as cedar shakes and shingles, plywood, veneer and logs have been a real driver for B.C. export growth to China in the past decade. That category’s exports have grown more than 2,300% from $15 million in 2000 to $362 million in 2009.
Japan, in contrast, has more than halved the amount of wood products that it imports from B.C.
In 2000, Japan imported $2.13 billion worth of B.C. wood products. That shrunk to $763 million in 2009.