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Record fuel prices forcing shutdowns, threaten entire U.S. timber supply chain, ALC warns

Skyrocketing, record-breaking diesel fuel prices are forcing some logging and trucking operations to shut down. More shutdowns will follow. Fuel was once 25 per cent of the operational cost of running a truck, now it is up to 60 per cent plus. When it costs $1,118 to fill up a logging truck, plus the other expenses to operate, there is not a profit at the end of the day.

Unlike most industries, the timber industry cannot pass on increased costs caused by fuel and inflation. Their consumer (mills) simply disregards the request for a fuel adjustment and the information breaking down the additional production and transportation costs. Many have provided partial fuel adjustments but not to the degree necessary to offset the additional expense. It is a take it or leave it business philosophy.

As a result, mills in Michigan and Maine are reportedly nearly out of wood. Companies have “parked” their equipment because they cannot afford to operate under the current price structure.

“Got down to three truck drivers out of seven trucks. Was fairly close to the mill, now they want me to move 70 miles from home and haul to two different mills that the truck drivers had to wait three hours minimum to get unloaded,” explained said  Tim Rodrigues of Rodrigues & Sons Logging in Texas. “So, I just carried my stuff home. I’ve sold most of it. No need to lose what little money I have.”

According to Michigan Logger, “For 22 years it’s been the smell and sunrise that has kept me and my boys working 12 to 16 hours a day, six days a week. The smell and sunrise don’t pay the bills anymore. When the mill managers and landowners set the logging and trucking rates, they need to figure out a way to pay the loggers and truckers, it’s been too many years figuring a way to pay the logger and trucker the least that they can.”

For Rebecca Pipkin of Mark Pipkin Logging in Arkansas, “There are a lot of things hurting the logging industry. Insurance, parts, fuel, and equipment have increased to the point that you can’t make any profit. We had logged for over 20 years but can’t continue to lose money in this industry. We are no longer logging due to everything going up but our pay.”

After a period of major forest products companies posting record profits, it is an insult to injury for loggers and truckers to be losing money while supplying many of these mills. It is like rubbing salt in a wound. Particularly when much of the forest products industry touts sustainability and business practices based on certifying criteria.

The Sustainable Forestry Initiative (SFI) references responsible fiber sourcing to include economically responsible use and an emphasis on sustainable supply chains.

The current procurement practices of many SFI certified mills are neither economically responsible nor sustainable supply chain practices from the loggers and truckers’ perspective.

In publicly announcing his decision to shut down his logging business after 40 years, Bobby Goodson asked: “We are the people that hold up a $300 billion dollar industry. Why are we having to fight tooth and nail for every nickel we get?”

It is a fair question and one that industry and policymakers better pay attention to before it is too late, if it isn’t already. For the most part, the story is the same across the country within the logging and trucking industry.

“This is the worst time I’ve seen in my 45 years around the industry. It’s probably going to get worse before it begins to look just a little better,” said Crad Jaynes, executive director, South Carolina Timber Producers Association.

First and foremost, the obvious solution is for the wood consuming facilities to provide a fuel surcharge to offset the additional production and transportation costs being borne by loggers and truckers.

Until more fuel literally gets into the pipeline, the options to address the fuel crisis are limited. However, the American Loggers Council has identified and shared with Congress and the White House immediate actions that will reduce the cost at the pump and improve transportation efficiency.

1. Temporary suspension of the federal and state fuel taxes. This will reduce the cost of diesel fuel by 45-75 cents per gallon. Some states have already done this regarding the state portion.
2. Allow for the use of off-road diesel for on-road use. This fuel is not taxed and therefore generally less expensive. This has been done during prior emergency situations.
3. Allow logging trucks access to the federal interstate system at the weights currently operating on local, county and state road systems. This will increase fuel efficiency of logging trucks by 10-20 per cent, by allowing them to travel the shortest route.

Unfortunately, the response from many forest products mills, Congress, and the White House/Administration have been minimal at best. Without action – any action – the consequences are going to be more logging and trucking companies shutting down, wood products will be more expensive, and scarce, and forest management will not meet best management practice standards required to ensure healthy U.S. forests.