The Softwood Forest Products Buyer - March/April 2024

Delta

Delta Forestry Group Continues To Thrive In A Changing Landscape Lumber Shipping Companies Are Cautiously Optimistic As Traditional Trends Return By Zach Miller “While the trees aren’t going away, there is going to be less of them with the changing landscape and our company is still going to thrive, with our size, management and decision-making style. We will do well in the long term as we continue to operate like a family sized business rather than a big corporation.” – Dean Garofano, President and COO, Delta Forestry Group Lumber shipping companies saw that their trends year over year have begun to revert back to how traditional markets have been in the past, but they hold a cautious optimism as geopolitical factors can easily affect the supply chain strategies. One shipper noted, “We slowly saw the industry normalize over the last 12 months and it is back to pre-pandemic levels. I do not foresee any substantial increases in our export shipments over the next 12 months.” Despite seeing their markets slowly return to the traditional trends, a lumber shipper remarked, “Asking me to predict shipping volumes in the first quarter of 2024 is akin to throwing spaghetti at the wall and seeing ‘what sticks.’” A shipper stated, “The only constant across all industries is that margins are being squeezed. Going into the New Year, we can all be hopeful that the economy starts to pick back up, but I am not sure that is what we will see.” The October figure was still 15 percentage points below 2019 levels, and with no sign of improvement since May, according to Sea-Intelligence Maritime Analysis. To manage the impact of overcapacity primarily driven by the influx of newly ordered vessels entering the market, carriers are pulling out all the tricks to absorb capacity. They have many tools at their disposal, whether it’s blank sailings, cancelling or suspending entire service loops, further slow steaming, laying up ships or taking longer routes. While all that will combine to help carriers weather a rough patch of unfavorable supply-demand economics, it undermines schedule integrity and service reliability. The disruptions caused by the COVID-19 pandemic highlighted the fragility of global supply chains. In response, the ocean transportation industry is focusing on building resilience. This involves diversifying supply chain sources, adopting agile logistics strategies, and investing in redundant systems to mitigate risks and ensure the uninterrupted flow of goods. The maritime industry is embracing digitalization at an unprecedented pace. From smart containers with real-time tracking capabilities to blockchain-based documentation, technology is streamlining operations, reducing inefficiencies, and enhancing overall transparency. 2023 was also marked by longshore labor disruption. The International Longshore and Warehouse Union (ILWU) flexed Continued on page 38 Rick Harris, Delta Forestry Group’s new Director of Strategic Development. Delta Forestry Group has moved their headquarters from their Delta Cedar Sawmill location in Delta, BC, to Pitt Meadows, BC, where their Halo Sawmill is located. Dean Garofano, President and Chief Operating Officer (COO), stated this move has been beneficial for the company, “Not only are our current employees happy to have a less stressful commute to work but we’ve also found that the move has been nice for attracting new employees because if they live in the area surrounding the new headquarters, they won’t have to drive through heavy traffic.” Delta’s website has also made a transition as it highlights the Delta Forestry Group and its four companies: Delta Cedar Sawmill, Halo Sawmill, Delta Cedar Specialties and Delta Timber. Each of these companies that the Delta Forestry Group is comprised of brings a different and important value-added aspect to one another. “The website is able to show our integrated offerings to our customers and how we are able to go from forest floor to finished product,” explained Garofano. “We are able to buy and harvest timber, manufacture it into rough cut lumber, remanufacture it into a value-added product and sell it to our customers.” Delta Cedar Specialties is the sales and marketing arm of the Delta Forestry Group, which handles all of the products that come out of the Delta and Halo Sawmills. The Delta and Halo Sawmills are run independently and while they are cutting their own logs, they also provide custom cutting services. “Our customers continue to come to us for custom cuts as they know the experience and credibility that we have in the industry for not only doing a good job but for being trustworthy as well,” Garofano stated. Delta Timber is the timber division from which the Delta Forestry Group is able to source fiber. Delta Cedar Specialties then cuts the logs in one of their sawmills and then remanufactures the rough-cut lumber into finished products. “We have partners that we work with to manage our remanufacturing,” Garo- Delta Forestry Group recently completed construction on this 80-bin sorter. fano said. “Even though we have a few different facilities that our remanufacturing is done at, we have a quality control program that allows us to maintain consistency. Our production managers are always on site and make sure that everything is consistent and is done according to our grades and that the fiber looks presentable.” Delta is able to continue to provide these integrated services to their customers through the capital investments that they are continuously making to their facilities. “We just finished a project here at the Halo Sawmill, where we added a Raptor Trim Line and an 80-bin sorter behind it, which replaced our old green chain,” Garofano said. “This is going to help us with our mill production and will allow us to send lumber through the trim line at a faster speed when we ramp up production on a specific cut. We are also not having to rely on employees pulling the lumber off the green chain during this period where it is difficult to get laborers who are willing to do such physical work.” Delta offers Western Red Cedar, Douglas Fir, Alaskan Yellow Cedar and Hemlock. “While we offer the four species, most of our focus has been on producing Western Red Cedar in past years,” Garofano stated, adding that he believes that there will be a shift in this focus as the fiber basket continues to be altered by natural disasters and old growth deferrals. “Trying to grow our Cedar business has been challenging with climate changes and government policies impacting our fiber supply, it is getting harder to find the timber that we need, especially Cedar. Delta is now focusing on growing their Hemlock program while maintaining their cedar volumes. “The industry is in a transitionary period and it is going to be turbulent over the next several years and I think that our company is set up for a very bright future when we look past some of the obstacles that we will have to overcome,” Garo- The Delta and Halo Sawmills are run independently and while they are cutting their own logs, they also provide custom cutting services. Continued on page 46 DC PREMIER Appearance timbers and 2” dimension A division of the Delta Forestry Group Logging - Milling - Finishing DC SUPERIOR STK kiln dried fascia, decking, siding and boards DC SUPREME STK green fascia decking, siding, and boards Delta Cedar Specialties 604 589 9006 deltaforestrygroup.com DC SELECT std&btr no hole green decking and boards Page 6 Softwood Forest Products Buyer • March/April 2024 Softwood Forest Products Buyer • March/April 2024 Page 7 Peter Lovett Peter Lovett King City Forwarding USA, Inc. Chesapeake, VA As we sail into 2024, the ocean transportation industry is experiencing a sea change in trends that are reshaping the way goods are moved across the globe. These shifts are not only altering the dynamics of maritime commerce but also necessitating innovative strategies to address supply chain challenges. I would characterize 2023 as the “correction” year in the ocean freight market where we saw significant reductions in export and import freight rates across all trades. There was an overall decline in ocean freight demand globally caused by a slower economy, as governments across the world managed inflation. Overall, the supply chain experienced better fluidity in 2023, with the alleviation of port congestion on the East and West coast, which resulted in more reliable shipping schedules. Even with ports clear of congestion, service reliability remains an issue, not having reverted to pre-COVID levels. Due to overcapacity and carriers’ aggressive response, it will likely not return to normal levels in 2024. Global container ship scheduled reliability stood at 64.4 percent in October, up from 51.8 percent a year earlier and approximately 35 percent in 2021.