Friday, August 2, 2013

Container Shipping Lines May Profit From Rising Freight Levels of Timber Exports

Growth Area as Chinese Building Boom Takes Off
Shipping News Feature

CHINA – EUROPE – US – RUSSIA – NEW ZEALAND – Much is made of the amount of coal and ore of all types which China uses annually, unsurprising given the tonnages involved and the effect on bulk shipping companies worldwide. What has perhaps been less noticeable has been the fluctuating Chinese import market for timber, something which can prove a valuable revenue source for the container lines searching for freight on its way to Asia.

According to statistics reported by the Wood Resource Quarterly, a publication by Wood Resources International LLC, shipments of both whole logs and prepared timber (lumber) dropped during 2012 and the early part of this year. Now however the situation has changed radically as Chinese house-building activities have increased in the first half of 2013 as compared to the same period in 2012. Year-over-year, investments were up 13% in residential buildings, and 23% in commercial buildings, according to recently published official Chinese statistics.

Lumber imports have grown significantly faster than log shipments and the pattern of exporters has also altered with New Zealand now the biggest supplier of logs, overtaking Russia in this respect, and the US and Canada providing 25% of all Chinese log imports, whilst Russia and Canada are now the biggest two lumber suppliers. This is no small market with the second quarter of 2013 showing imports for both products exceeding $2.2 billion, up $600 million from Q1.

In the longer term lumber shipments have tripled in four years and now European sawmills are starting to wake up to the export possibilities as the Chinese lumber market expands. In June of this year European lumber secured 8% of the Chinese market but there is room to expand this, and with space regularly available on the return leg for returning containers, prepared and sawn timber may well prove a useful commodity for some of the box carriers.

Unfortunately the demand for quality lumber inevitably leads to problems and the ocean freight lines have to be careful where timber is sourced. Three years ago CMA CGM were criticised by environmental groups for carrying 275 containers of rosewood, protected in many countries, after it had been felled in protected areas of Madagascar, for export to China.