The Softwood Forest Products Buyer - March/April 2023

Lumber Shippers View

Lumber Shippers View Their Work Realistically And Optimistically By Matthew Fite The waters are choppy for lumber shipping companies, but they continue doing their due-diligence and seeing positive results. One shipper stated: “Our lumber shipments are lagging now, but we remain hopeful they will continue to increase as we move into the first quarter of 2023.” Another shipper mentioned difficulties, adding: “Our team was able to adapt within the confines of shipping, to not only make it work but to do so successfully. The amount of effort input on a daily basis to accomplish what we were able to in 2022 was remarkable.” He also said that in 2023, “I believe the U.S. economy will head for a mini- (soft) recession before slowly making its way back.” If optimism is one part of success and hard work is another, then these shippers have put themselves in a position to do well in 2023. M&M Lumber: A Legacy Of Service And Quality By Scott Dalton ARCHITECT: MARTIN FENLON | PHOTO: ZACH LIPP A family-run operation. An international reputation. Highest quality, select knotty, fascia & trim, siding and specialty products. Curtis Struyk TMX Shipping Co., Inc., Morehead City, NC 2022 was a very challenging year. Every aspect of the supply chain was broken: vessel space shortages, unreliable vessel schedules, container and chassis shortages, manpower shortages, port congestion, rail congestion, truck power shortages. Yet somehow, we survived all the chaos. We fought supply chain issues every day in 2022, the biggest culprit being unpredictable Wide range of superior, clear, vertical grain decking, siding and specialty products. Paneling | Siding | Fascia & Trim | Dimension | Engineered pwww.ca | 604.946.2910 | Delta, BC, Canada vessel schedules. Dates changed every single day which made it difficult to plan trucking, fumigation, inspections, loading appointments, etc. We must get vessels back on schedule so we can have dependability in the market. Thankfully we employ a group of intelligent, hard-working and detail-oriented employees who worked harder than ever to make sure our customers were taken care of. The life of a freight forwarder has not been easy these last few years and we feel the value we provide to our customers was on full display. The tides seem to be turning, and demand is waning, but we are still seeing the after-effects of a broken supply chain. Rates have started falling on both the import and export side. Export rates are still very inexpensive, so I predict the rates to stay depressed through Q1 and Q2 2023, especially with additional vessel capacity coming to the market in 2023. There are still certain inland destinations where equipment is very scarce. With import demand falling by 40 percent, replenishing inland pool locations will be difficult at times through the next year. We have noticed an increase in activity quoting log shipments since the end of December. I expect that trend to continue through Q1 and Q2 of 2023. Our lumber shipments are lagging now, but we remain hopeful they will continue to increase as we move into the first quarter of 2023. There is no doubt our economy will enter a recession in 2023. I think the biggest question is: how long will it last? The government will, and must, get inflation under control. I think that will happen by Q3 2023, and the Fed will reverse and begin lowering interest rates. There are a lot of variables still at play, so I remain cautiously optimistic until we are out of the woods. n Continued on page 46 Most of the M&M Lumber crew are shown in this 2022 Christmas picture. Tulsa, OK—When Jim McKellar Sr. co-founded M&M Lumber, located here, back in 1964, he likely had no idea that one day his granddaughter would be co-running the company. McKellar started the business after serving in the Navy during World War II. In fact, it was during his military service that he was first exposed to the lumber industry; he ran a sawmill in Guadalcanal on behalf of the Navy during the War in the Pacific. “We work with everyone, from the person building birdhouses to the contractor constructing multi-family apartments. We change with the times as the market predicates it.” – Sean Stevens, M&M Lumber When his son, Jim McKellar Jr., assumed leadership of the company, the younger McKellar integrated a number of changes to the business, modernizing production and helping to expand the company’s offerings. It was during this time that his children, Amy, Justin, Whitney and Audrey, were exposed to M&M Lumber, growing up with it as an integral part of their lives. As Whitney took on more responsibilities, she was joined in the business by her high school friend, Sean Stevens. “I was friends with the boss’s son for a long time,” Sean recalled, noting he joined the company in 1992, soon after graduating from high d #1 Inventory Management Profit Strategy:. Stock No More Than Needed to Properly Service Demand This practice is crucial to profitability. Here’s why: This is the 2022 “Girls of M&M Lumber” Christmas photo. • Every • Every day day that that excess inventory is is owned, it it is is either either costing costing interest on on borrowed money, money, which which increases expense, or or it it is is preventing the the earning of of interest on on owned owned money, money, which which decreases income. Whether capital is is borrowed or or owned, excess inventory is is always eroding profitability. • Let’s say a yard has sales volume of 110,000 BF/month. If brought in all at once by car, the inventory • Let’s say yard has sales volume of 110,000 BF/month. If brought in all at once by car, the inventory can turn once a month if needs are correctly projected. But if metered in by truck in 27,500 BF will turn once month. But if metered in by truck in 27,500 BF increments at one load per week as increments at one load per week as actually needed, that inventory will turn 4 times per month – actually needed, that inventory will turn 4 times per month – and tie up only 1/4 as much cash. and tie up only 1/4 as much cash. • Now suppose this yard pays for a car 10 days after it ships and it takes 3 weeks to deliver. It paid for • Now suppose this yard pays for the car 10 days after shipment and delivery takes 3 weeks. It paid for times the inventory it needed, and won’t see any of it for 11 more days. But if it buys by truck with 4 times the inventory it needed, and won’t see any of it for 11 more days. But if it buys by truck with quick delivery, every stick can be sold before the invoice even comes due. In fact, three truckloads quick delivery, every stick could be sold before the invoice even comes due. In fact, three truckloads would be sold this way before the car could even have arrived, and using only 1/4 as much cash. could be sold this way before the car could even have arrived, again using only 1/4 the capital. • This strategy dependably multiplies turns and GMROI, dramatically improves cashflow, cuts carrying • This strategy dependably multiplies turns and GMROI, dramatically improves cashflow, cuts carrying costs and frees up both capital and space for more profitable use. Margins are maintained and costs and frees up both capital and space for more profitable use. Margins are maintained through market downside moves risk is and virtually downside eliminated risk is significantly regardless of reduced market because moves because the inventory the inventory is turning turns faster faster than price than price changes changes can affect can affect its value. its value. There’s There’s less inventory less inventory to count, to count, and stock and stock stays stays fresher, fresher, too. too. Maximize your profit with this safe and efficient strategy. Call Idaho Timber for highly-mixed trucks and just-in-time delivery. (800) 654-8110 Continued on page 47 Page 8 Softwood Forest Products Buyer • March/April 2023 Softwood Forest Products Buyer • March/April 2023 Page 9