Wall of Wood: Armada of ships off Gisborne the biggest in a century wait to load at Eastland Port

More than a dozen logging ships are anchored off Gisborne, a sight not seen since the heyday of coastal shipping a century ago.

The armada of 30,000-tonne plus vessels in Poverty Bay/Tūranganui-a-Kiwa and further out to sea are part of what’s been described as a forestry “gold rush”.

It will take about a month to clear the backlog of ships which has built up as bulk freight has been knocked out of kilter by the coronavirus pandemic’s impact on supply chains, logging companies ordering surplus capacity and some local factors at Eastland Port; wharf repairs during the day and, recently, bad weather.

The port company’s chief operating officer Andrew Gaddum said it was thought to be the biggest influx of ships since during World War I, when coastal shipping was at its peak.

Demand for logs from China was running hot and the port was on track for the biggest year in its history.

“We’re in the throes of a bit of a gold rush at the moment,” he said.

Eastland Port was working with shipping and forestry companies to help relieve the backlog.

Idle logging ships were costing their owners about US$25,000 ($35,000) a day and on Sunday there were 13 vessels anchored in the bay and beyond past Young Nick’s Head.

Maintenance work on wharves meant ships could only be loaded at night but this had been finished and the port, which is exposed to southerly storms, was looking forward to some better weather, said Gaddum.

The global situation wasn’t helping.

“Everything seems to be slightly out of whack at the moment,” he said.

Further south, increasingly unreliable shipping schedules and a lack of refrigerated containers is causing headaches for the export industry in Hawke’s Bay.

About 40 container ships have missed their scheduled calls at Napier Port in the past eight months.

Additionally, Napier Port has received six unscheduled calls to primarily discharge empty containers for the region’s seasonal exports – which typically peak February to August – and 23 unscheduled calls in bulk shipping due to strong markets in logs and oil products, Hawke’s Bay Today reported.

There has also been a jam at the Ports of Auckland, causing supply problems for importers.

Eastland port handles logs from the East Cape and Gisborne hinterland.

ANZ’s commodity index showed forestry posted another record in June withprices lifting a further 3.6 per cent.

This is being driven by very strong demand within China for logs.

”However, the strength of this market is of little consolation when it is so difficult to get product to market. The forestry sector is also experiencing extremely high shipping costs and regularly being faced with delays, which is frustrating when demand for logs is so strong,” says the ANZ.

A Ministry of Primary Industries report released last month said forestry export revenue was forecast to reach $6.3 billion in the year ending June 2021, an increase of 12.8 per cent from 2019-20, when the forestry sector was prevented from operating during level 4 lockdowns.

Harvest volumes are set to reach 36.5 million cubic metres in 2020-21, up 14.5 per cent from last year. Log export volumes are expected to increase 21.4 per cent, reflecting increased demand for export logs.

“The forestry sector has continued to benefit from rising global demand for our key forestry products, as well as strong domestic demand. Internationally, rising demand for New Zealand’s logs and sawn timber, especially from China and the United States, is putting upward pressure on export prices.”

In New Zealand there has been strong demand for construction materials due to a strong housing market.

Forestry export revenue is forecast to rise to $6.4b in the year ending June 2022, as prices are expected to continue to rise.

Over the medium-term, forestry export revenue is forecast to increase between 1.4 to 2.1 per cent annually to $6.8b by the year ending June 2025.

Chinese log demand has pushed export A-grade prices to $164 per cubic metre in the March 2021 quarter, near the record levels from two years ago.

New Zealand’s timber exports to the US are currently at their highest level since 2008 due to a combination of strong residential construction activity and constrained timber supply in the US.

Chinese demand for logs remains strong, driven by increased construction activity and further supported by supply constraints such as the ban on Australian logs, and a reduction in global shipping capacity.

New Zealand remains the largest supplier of softwood logs to China followed by Germany, Russia, the US, Uruguay and the Czech Republic.

China’s log imports from most countries have been growing, including New Zealand, and accounted for 83.3 per cent of New Zealand’s total volume of log exports in the year ended March 2021.

Log export revenue is forecast to reach $3.8b in the year ending June 2022, on the back of continued strong demand as China ramps up infrastructure projects.

The outlook for log prices is expected to decline slightly due to increased supply from other countries. European and South American foresters anticipate increased log shipments to China, which is likely to put downward pressure on New Zealand log prices.

“It’s not clear whether Russia’s proposed log export ban in early 2022 will be a complete or phased-in ban, but nevertheless, the ban is expected to partly offset the impact of increased supply into China and support New Zealand log demand and prices in the medium term.”

In the medium to long term, Chinese demand for New Zealand’s timber is set to remain subdued as Russia becomes more competitive in the Chinese market, the MPI outlook said.

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