Always Something...

It is said that variety is the spice of life, and we probably all prefer a workday that offers us challenges instead of a mundane repetition of the same routine. However, some level of calm stability would be nice for the hardwood industry. Inarguably, we have the most advantageous supply situation we have had as lumber manufacturers since 2012, meaning lumber production has been constrained for various reasons. Meanwhile demand is increasing with improved building construction numbers in the US and economic growth in about every major world market creating multiple market desire for hardwood products. These are both favorable situations, and realistically our customers don’t mind paying higher prices when the overall trend is up. The volatility of the hardwood lumber business, however, has trained us to always be ready for that circumstance that is unforeseen, may not directly relate to hardwoods specifically, and can cause great havoc to an otherwise comfortable situation. 

The situation I am concerned about most immediately is trucking. The hardwood industry has long been the red headed stepchild to logistics companies. We have a heavy product, we cannot afford to pay the highest freight rates to move our products, and we don’t put our manufacturing facilities in the most ideal locations to get trucks in and out of. However, truck freight is crucial to any success the hardwood industry has. And while many manufacturing regulations have been rolled back by the current government administration, trucking regulations have not. This lack of deregulation, is penalizing hardwood manufacturers which can have profitability greatly impacted by freight fluctuations.

             The mandate and rules on Electronic Logging Devices for freight carriers is creating significant freight increases that are offsetting market price gains for hardwood products. The increases on top of current market appreciation is a threat to established relationships simply because customers can only afford a certain level of increase at any one time. The main motive behind ELD rules is safety, which is understandable. However, how that safety is achieved must be reasonable and practical. Limiting drive time hours but not making allowances for excessive delays in loading or unloading to be counted as rest time is having a negative impact on truckers and forcing rate increases which industries like hardwood lumber are struggling to keep up with. Lawmakers need to know how this is negatively impacting an otherwise positive economic environment for one of the largest primary manufacturing industries in the US. A recent article on Trucks.com; https://www.trucks.com/2018/03/26/electronic-logging-device-changing-trucking/, details several negative impacts of the ELD rules. 

Some of the most notable are:

-         67% of drivers say they are driving less

-         71% of drivers are making less money because of less miles

-         ELD regulations are making previously 1 day hauls into 2 day hauls and impacting carriers willingness to commit to certain lanes

-         40% increase in rates due to truckers having less miles per day available and strong demand for those miles from manufacturing industries

-         Per mile rates are up 20-30% from 2017

             Freight increases occur and industries have to deal with them by raising prices, being more accommodating, and the like, but when something is unfair we have to exercise our right to voice our concern to raise awareness and hopefully create positive change. The ELD situation is unique in that it is disproportionately unfair to independent owner operators, which makes up a large percentage of the hardwood industries carrier relationships. Larger trucking organizations favor this but passage of this has left a disparity between large and small, mom & pops v. conglomerates, locals and national carriers. Hardwood manufacturers can certainly empathize with this type of plight.