Softwood lumber exports to U.S. fall 20% in March amid railway woes

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Total Canadian shipments in the first three months were down 17.4 per cent, but up two per cent from February to March.

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Shipments from Quebec — Canada’s second-largest forestry producing region — were down 16.6 per cent in the first quarter and Ontario was 8.6 per cent lower. Alberta was down 28 per cent while the Maritimes were nearly five per cent higher.

Canadian National Railway and Canadian Pacific Railway say western Canadian routes were more affected by cold winter weather and unexpected volume increases that slowed traffic.

Paul Quinn of RBC Capital Markets said transportation shortages were at the forefront of a recent Montreal wood convention.

“Canadian railway and trucking officials in attendance pledged that improvements were expected soon, but … two weeks since the convention most traders report that rail service in Western Canada remains poor,” he wrote in a report.

Shipments from B.C. have represented 47 per cent of U.S. imports from Canada so far in 2018, below the 48 per cent in 2017 and the 10-year average of 54 per cent.

Patel said nearly 60 per cent of B.C. export volumes went to the U.S. in February, down from 68.4 per cent in January.

B.C. exports to China have been decreasing annually since 2013 and are running 22 per cent lower for the year after falling 27 per cent in February.

Shipments to Japan are up marginally.

The slide in export volumes comes as western SPF (spruce, pine, fir) lumber prices ended last week at near record highs of US$540 per thousand board feet.

“Transportation issues gave mills the upper hand, as two-by-four quotes increased by US$20-$30 per thousand board feet, pushing prices to $540 ($2 below record highs from early March),” Patel added.

The price of lumber has surged to cover the softwood lumber duties applied by the United States government.

Follow @RossMarowits on Twitter.

Companies in this story: (TSX:CNR, TSX:CP)

Ross Marowits, The Canadian Press

Note to readers: This is a corrected story. A previous version had the incorrect number for B.C. exports last year.