In addition to the negative effects of the coronavirus crisis, the current situation on the German wood market is putting companies in the wood packaging industry under massive pressure. The supply situation is more than tense across all materials, ranges and product groups. This affects the three essential areas for maintaining production: availability, delivery time, price.
To obtain a realistic picture of the current situation, the German Federal Association of Wood Packaging, Pallets, Export Packaging (HPE) carried out a survey on the supply situation and market development at the end of March, in which 160 member companies took part.
“The worst is when it comes to the purchase prices for lumber,” explains HPE Managing Director Marcus Kirschner. “Prices quoted by timber dealers are usually only valid for 24 to 48 hours, for a maximum of one week. A third of the companies state that they are affected by failed supply contracts and orders. ”Another 15% confirm that not only supply contracts or orders, but also framework agreements are unilaterally terminated or canceled.
90% of those questioned report that certain ranges are only available to a limited extent, for 64% some ranges are no longer available at all. At 57% of the companies, important assortments are completely missing from their inventory.
Companies paint a similarly threatening picture with plywood, which almost 80 percent of companies need for their products. For 70%, certain assortments are only limited and for 42% they are no longer available. Scandinavian hardwood plywood in particular (70%), plywood from Western and Central Europe (50% and 52%) as well as from Russia and Eastern Europe (50% and 56%) were only available to a very limited extent at the time of the survey at the end of March. Wherever information on the delivery time is still given, this would sometimes be more than 12 weeks. At the same time, the prices quoted by the suppliers have been shortened: “48 hours” is the maximum.
For OSB, things don’t look any better in terms of prices, delivery times and availability. 87% of those surveyed stated that certain product ranges are only available to a limited extent. 35% of the suppliers no longer provide any information on the delivery time.
“The companies have taken various countermeasures to counter the very tight supply situation on the timber market,” reports Kirschner. “Around half have already postponed orders, more than a third have canceled orders, customers only receive quotas.” Over 20% of the companies have already been forced to cut back on their production. So far, there have been largely no layoffs, but 6% have already had to apply for short-time work.
“The companies in the wood packaging industry are hit by the pandemic and the extremely difficult lumber market. Significantly rising steel prices for fasteners and girders as well as container and forwarding costs are added, ”the HPE managing director summarizes the dramatic situation. “The current procurement problems lead to liquidity bottlenecks, a lack of predictability and enormous uncertainty among companies.”
Ultimately, the entire transport of goods could be threatened: “In order to be able to plan production processes efficiently and control them reliably, reliable delivery times are of enormous importance. Due to the generally very low margins in the industry, the current developments have an immediate impact on the liquidity as well as the production and delivery capacity of companies. Our companies can only produce their pallets and other wooden packaging materials if the suppliers also deliver. Since this is not currently the case and the situation is getting worse every day, impairments in the entire movement of goods within Germany and also during export can no longer be ruled out, ”concluded Kirschner.