The Logging Industry 2018: Boom or Bust?

Logging equipment purchases are off to a strong start, but many experts fear that the U.S. import duties will hurt the industry.  Late last year, the U.S. Department of Commerce ruled that it would levy total countervailing duties (CVD) and anti-dumping duties (ADD) at 20.83% on lumber imports from Canada. Canadian lumber exporters were quick to get a jump on their prices before the duties took effect, and lumber prices have remained at record-highs ever since.

Now that four months have passed, what effects has the industry experienced? Experts are concerned for the future and warn of a supply gap if importers and exporters aren’t careful, although equipment purchases still remain strong.

More Money for Less Lumber

Increased prices on lumber have taken a toll on the entire supply chain. From exporters to importers and the final consumer, everyone is paying more for lumber. Many experts are signaling that these prices won’t ease anytime soon, so U.S. companies are actively finding ways to help mitigate any financial risks. Luckily for United States companies, the U.S. housing market is entering a slow period, meaning lumber won't be in as much of a demand. This could change in the coming years, however, so industry leaders must stay ready.

To help put off a potential supply gap in softwood, many importers are relying on European lumber exporters to fill the gap that higher-priced Canadian lumber once held. 

Even with these high lumber prices in mind, logging equipment is off to a strong start this year, with recent data showing strong sales numbers from logging equipment finance companies and buyers alike.

A Look at the Data

Industry research firm EDA recently posted financial data for the most popular equipment types sold in the U.S. Felling equipment is highly ranked in many lists, closely followed by building equipment. These are the ten most popular equipment types from EDA’s database:

EQUIPMENT TYPE                           BUYERS          UNITS

LOG LOADER                                    41,547              89,621
SKIDDER                                           46,872              89,598
GRAPPLE SKIDDER                         24,636              60,225
CHIPPER                                           36,962              58,767
FELLER BUNCHER                          18,252               43,563
CRAWLR DOZER (LOG)                  20,806               38,263
STUMP CUTTER                              23,829               33,041
SAWMILL                                          19,883               25,644
WHEEL LDR (LOG)                          11,647                23,443
EXCAVATOR (LOG)                         10,087                23,435

EDA also has data on the top logging equipment lenders and buyers for the month of February 2018:

Top Lending Companies

JOHN DEERE INDL CREDIT                       78
CATERPILLAR FIN SVC CORP                   46
DE LAGE LANDEN FIN SVC                       25
WELLS FARGO VENDOR FIN SVC LLC    18
STEARNS BANK                                         15

Top Equipment Buyers

BLUE STAR EQT LLC               DETROIT, MI                           10
LOGGING EQUIPMENT           BANDIT                                      5
LOGGING EQUIPMENT           MORBARK                                 5
TREESMITHS INC                    SPRING BROOK TWP, PA        5
LOGGING EQUIPMENT           ALTEC                                        5

Predictions for the Rest of the Year and Beyond

Although the lumber prices continue to remain at record highs, many industry experts predict that demand for forestry equipment will continue to rise into the next year. The U.S. will lead the pack in the demand for newer logging equipment, although nations in the Asia/Pacific region follow closely behind.