You may have noticed the sharp increase in Timber prices recently. It is true that Timber prices have been steadily increasing over the past few decades. However, when we compare the 5% increase of Timber prices from 2014 to 2017 to a 9.4% growth from 2019 - 2021, it is clear to see that the rate of increasing is more significant and worrying. In fact, the Federation of Master Builders (FMB) have reported that Timber is the 9th in their list of materials that are in the shortest supply. Furthermore, the industry revenue is forecasting a further decline of 8.7%.
So what is causing the sudden sharp price increase and what can we do about it? In this blog, we will dissect the factors contributing to this phenomena.
Firstly, it is important to understand that prices of timber are heavily dependent on supply and demand. When supply is high and demand is low, prices of Timber go down and the same goes vice versa. Due to the uncertainties surrounding Brexit, this hindered the growth of Timber demand as a result of construction activity going down. According to a 2021 IBIS World report, demand from commercial building construction has fallen by 7.1% and demand from residential building construction has fallen by 3.4% between 2016 and 2021.
Furthermore, Timber from overseas is traditionally more popular. In fact, the Forestry Commission found that approximately 7.2 million cubic meters of sawn wood timer was imported into the United Kingdom in 2020. Therefore, Brexit caused big issues here as tariffs, quotas and fees were put in place, making timber transport a lot slower, more difficult and more expensive than before. Thus, demand has increased and supply has decreased.
Coronavirus has affected almost every aspect of life, and timber prices are no exception. Despite imports of timber being sources overseas being popular, the lockdown restrictions of border closures imposed by COVID-19 have completely halted and lowered supply dramatically. This has forced a decrease in construction activity, which we have mentioned before heavily influences the supply and demand of timber and therefore also its price. Because of COVID-19 materials have become historically even more difficult to source. In fact, the FMB conducted a survey in April 2020 which found that timber was quoted to be one of the 3 hardest materials to source due to disruptions in the supply chain. Additionally, another survey conducted in May 2020 by ONS Business Impact of COVID-19 found that 18.7% of UK construction companies noticed higher prices than normal and that 11.2% were unable to obtain the materials they needed to continue work.
A solution to this is for UK construction companies, like Logos Logistics, to source timber domestically in the UK market, or even create self-made timber which would in turn be better for the environment. This way, UK construction companies would become less reliant on overseas sourced timber and reduce the cost and time that Brexit would have imposed. According to the real estate company, Savills, as sawmill activity increases, so too does supply which would decrease timber prices as a result. Finally, a campaign that was running in the early 2010s called “Grown in Britain” was trying to achieve exactly this as its aim was to encourage the public to utilise homegrown wood as it reduced carbon footprint.
Here at Logos Logistics, we have 17 years of experience in providing services in stress-free move management solutions including transportation, storing your machinery in our temperature-controlled purpose-built facility, and more for a wide range of industries, all while having robust insurance. So if anything goes wrong, it's on us.
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