The timber and construction sector must prepare for a difficult period regarding product availability. The director of Dutch Royal Dekker is sounding the alarm about the consequences of the conflict in the Middle East. According to the timber specialist, the effects of the closed Strait of Hormuz and the resulting diesel shortage on the global market are being severely underestimated.
© Robbert Jan DekkerRobbert Jan Dekker (Royal Dekker) warns the industry of an underestimated crisis in the timber supply chain. "The pipeline of deliveries is gradually running dry."
While stock markets are showing signs of recovery, Dekker paints a grim picture of the reality in the international timber chain. "The supply pipeline is slowly running dry," he warns. Imports from Asia and South America, in particular, are being hit hard by a fuel shortage, paralyzing the entire logistics chain, from forest concession to sawmill.
Production in Malaysia and Indonesia grinds to a halt
In countries like Malaysia and Indonesia, the situation is critical. The price of industrial diesel there has risen by no less than 140%. According to Dekker, the problem there is no longer just the price, but primarily the physical availability of fuel. "Logging in forest concessions has virtually come to a standstill, ships supposed to transport logs are at anchor, and many sawmills have stopped sawing," said the director.
This has led to a unique and worrying situation on the market: in many cases, it is currently impossible to determine a market price, simply because suppliers can no longer submit quotations.
Own diesel import in Bolivia
In Bolivia too, where Royal Dekker manages its own FSC forest concessions and sawmills under the Dekma Bolivia banner, the challenges are significant. The company benefits there from its own import license for diesel, allowing production to continue while local, subsidized diesel is barely available.
However, even the company's own operations are not immune to the crisis. "We are partly dependent on external transporters who sometimes wait at the pump for a whole day just to refuel," explains Dekker. Moreover, the machines and trucks running on the lower-quality local diesel break down more frequently, which further increases the pressure on logistics.
Concerns about the medium term
Although price increases in the sector are often viewed with suspicion, Dekker emphasizes that the current concerns run deeper than just the margin. Prices in the timber chain were historically low before the outbreak of the conflict, comparable to the level of seven years ago, meaning that many links in the chain were already balancing on the edge of profitability.
"Naturally, every supplier will warn of the effects of the war to justify price increases, but at the moment, we are primarily concerned about availability in the medium term," concludes Dekker. The message for the Dutch interior and construction industry is clear: expect shortages and longer delivery times that will be more drastic than current market forecasts suggest.
Source: LinkedIn.
