Impact of Covid 19 on timber trade
Impact of Covid 19 on timber trade
For information on the progress of the spread and the disease situation: https://www.worldometers.info/coronavirus/ We bring you here, and will continue to do so in the coming weeks, the information provided by our members and partners regarding the tropical timber market and the activities of companies in Europe, Africa and Asia.
A joint press release between EOS and ETTF: a result of an conference call in order to gather information on the current COVID-19 situation and how it affects the timber sector in Europe.
The time has come to seek a balance between supply and demand.
According to the April 8 GWMI article, « Several key Nordic softwood sawmillers have implemented production cutbacks in response to reduced UK demand for softwood lumber. »
In particular, Bergs, one of the large Nordic sawmiller that makes a large part of its sales in the UK market, said that « The effects of the coronavirus crisis are beginning to be seen in lower demand for wood products. »
On the European flooring market, while the first months of 2020 were promising, the arrival of COVID-19 in March put an end to the positive possibilies. On April 10, GWMI reported that « Parquet sales in Italy and Austria decreased by 10% in the 1st quarter compared to the first three months of 2019. »
Furthermore, in the context of the pandemic :
- the European Union has developed :
- in order to give some flexibility to certification bodies and certified entities affected by the disease, PEFC has issued the following guidance:
Containment is extended until May 11, 2020.
On April 16, 2020, the containment is extended for 3 more weeks. David Hopkins, TTF CEO explains that « On the one hand, the Government is calling for construction sites and their supply chains to stay open. « On the other, many will feel they cannot definitely provide the safety restrictions required, or are closing as their customers and the market shuts around them. »
According to a survey conducted by the Confederation of Swedish Enterprise at the end of March, companies in the Swedish forest industry are strongly impacted by Covid-19. « 80 percent believe that trade with other countries had been made more difficult. »« As many as 70 percent of companies have noticed a decrease in sales or order bookings compared to a year ago. About ten per cent have noticed reductions of more than 50 per cent and around 20 per cent said sales have decreased by 20 to 49 per cent,” says Kerstin Hallsten. »
“For the moment, everything is fine: our installations, our locks, our tugs… The whole port is 100% operational. Thanks to a special committee set up to manage the crisis and few sick people in our teams,” said Luc Arnouts, vice-president of the Belgian port of Antwerp in charge of international relations, Luc Arnouts, at a press conference on 3 April.
As he said, tomorrow’s maritime transport will be not the same as today and « we must prepare for it now ». “After this crisis, the entire logistics chain will be reorganised. We can expect two things: it will be more complex and more local. »
Eduardo Márquez, President of Federation of Wood Industries of Spain-FEIM and FAPROMA – Pallet Manufacturers Association and Wood Products for the Maintenance – describes the current and future scenario of the wood sector.
From his point of view, with Easter came an interruption of almost two weeks in the general supply of goods. Only those sectors that were considered essential, i.e. food and health, continue to be supplied. The flow of goods is greater than usual, but the supply chain is inefficient. Pallets are not recycled efficiently and thus there is an increased demand for new pallets from manufacturers to compensate for this.
There are currently three essential realities in the market:
- Part of the demand is blocked…
Logging is adapted to the part of the first transformation that is open, with notable differences between the Autonomous Communities. The Basque Country and Catalonia is relatively working well, while the regions of Burgos and Soria are almost at a standstill.
- A difficulty in evacuating by-products
The disposal of by-products is becoming a problem. There are companies that, faced with the impossibility of disposing of them or storing them in a reasonable manner, have had to stop.
- Stopping the export of processed products to the United States
All wood products for export, mainly to the US market and also largely to the European market, are also blocked. In general, exports will now be complicated because the impact of the pandemic on different countries is very differentiated. In conclusion, the President of FEIM considers that for the forest-wood value chain, the impact of the Covid-19 pandemic will be manageable. There will be an impact, more or less serious depending on the region, but it will not be insurmountable.
Following the announcement by Prime Minister Giuseppe Conté on 10 April concerning the extension of the containment until at least 3 May. 9 major companies in the Italian forest-wood sector – B&B Italia, Bisazza, Boffi, Cappellini, Cassina, Flexform, Giorgetti, Molteni Group, and Poltrona Frau – have come together to draw up a manifesto in which they call for the relaunch of production activities on 14 April.
Since the containment measures and the state of health emergency in most African countries, economic and social support mechanisms have been put in place, solidarity funds have been created, etc.
Africa pulse has just published an evaluation of the economic impact of Covid-19. The main messages coming out of this report are the following:
- The COVID-19 outbreak has set off the first recession in the Sub-Saharan Africa region in 25 years, with growth forecast at-5.1% in 2020 from a modest 2.4% in 2019.
- Economies in Sub-Saharan Africa could lose between $37 billion and $79 billion in output losses in 2020 due to COVID-19
- The region could face a severe food security crisis, with agricultural production expected to contract between 2.6% and 7%
- The World Bank Group and the International Monetary Fund have called for a “bilateral debt standstill,” which the report notes should be an important part of the global response to soften the impact of COVID-19 on Africa’s poor
Since the entry into force of containment on March 20, 2020, Morocco implement a Massive Plan to support the Economy and Protect the Population. Read the article.
With the exemption of prior authorisation for traffic, thus allowing the fluidity of logging trucks and technical assistance in the field, the Ivorian forest sector is currently working.
Faced with the market recession caused by the Covid-19, industrial companies are adapting their strategy to the context to reduce the negative effects.
The SPIB is mobilizing to find solutions not only to boost the sector but also to improve the resilience in the face of this pandemic and is actively participating in the think tank organized by the Ministry of Water and Forests
In the context of access to the business support plan put in place by the State, the SPIB is organising itself in order to support the preparation of its members’ files and to facilitate the submission, processing and consideration of their applications.
At the end of the National Security Council meeting, new measures were taken:
- Wearing of the mask is compulsory for everyone throughout the national territory under penalty of a fine;
- Intensify teleworking;
- Halving the number of people on public and personal transport;
- People with chronic illnesses must stay at home;
- A complete ban on the movement of persons between Abidjan and the interior, except in cases of justified and vital necessity;
- The curfew is extended;
- Continuation of early detection of covid-19.
Since the entry into force of the measures against the spread of COVID-19, no new measure has been put in place by the country’s administrative and political authorities.
Here are the official communiqués of the Minister of Public Service and the Governor of Kinshasa:
- DRC – Official communiqué Minister of Civil Service – Minimum service – 20200323
- DRC – Official message from the Governor of Kinshasa – Essential service – 20200403
The establishment of this minimum service limits physical contact.
To date, no specific measures have been taken concerning the forestry sector. However, trade unions are mobilising and organising to work with forestry companies and administrative services using all possible channels of communication: telephone, emails, whatsapp groups, etc.
The FIB and the FEC (Fédération des Entreprises du Congo) are currently working together on a report of the current situation and the direct consequences of Covid-19 to be submitted to the Government in order to propose solutions to save the forest sector during and after the pandemic. Companies are closely monitoring the situation.
New measures for Cameroon :
- Decree on the commutation and remission of sentences to certain prisoners;
- Renewal for 15 days of the 13 measures enacted on 17 March;
- Resumption of classes on 1 June 2020 in all schools and universities as well as vocational training centres and grandes écoles;
- Urgent finalization of the study to assess the impact of COVID-19 on the national economy and urgent determination of the accompanying measures to be implemented to support sectors of activity in difficulty and the most fragile households.
REPUBLIC OF CONGO
The implementation of containment measures by the population is difficult.
New provisions to facilitate the supply of basic necessities :
In this context of health crisis, on 10 April, the Senate adopted the new forestry legislation. We will tell you more very soon as soon as the law is promulgated, it will be the subject of a specific article of the ATIBT.
The full containement of Grand Libreville (concerning the provinces of Libreville, Owendo, Akanda, Ntoum, Pointe-Dénis), decreed from midnight on April 12 to April 26, replaces the partial confinement that had already been in force since March 22. This measure has a direct impact on the activities of the other provinces of Gabon, which are doing the maximum to maintain the activities. With this new decree, there are many new directives, not always easy to implement, especially when it comes to obtaining passes for officers who have to work.
Indeed, from April 15, companies that have obtained a pass are allowed to return to work. However, due to the announcement made on Friday 10 April, on the eve of the Easter weekend, many companies are still waiting for this permit to be issued to return to work. And on the other hand, this first day of work with a permit proved to be rather difficult because, among other difficulties, there was not enough public transport.
UFIGA is mobilizing to find solutions to the difficulties that the implementation of these new measures reveals every day, in order to support companies. To this end, UFIGA actively participates in the meetings of the COVID-19 unit organised by the Ministry of Forests, in particular to evaluate, exchange on the situation and try to find solutions.
To date, details of the measures have been published, including :
- Specific measures for the forest industry: “Only forest operators (logging and wood processing) will be allowed to continue their activities during the current critical period, as they can prove that they have the capacity to implement the following appropriate measures:”.
“[…] Each company is invited to prepare and submit its procedure describing its COVID-19 emergency plan” (model in the circular).
“[…] Apply a set of appropriate and specific measures according to the different types of activity sites. »
Read the full notice
GABON – Communiqué – Précisions sur les mesures de confinement – 20200411 Télécharger
GABON – Déclaration du Premier Ministre – Soutien économique et social – 20200410 Télécharger
GABON – Grand Libreville – Fiche sur les modalités pratiques de confinement – 20200416 Télécharger
GABON – MEF – Note de service 0008 – Permanence – 20200412 Télécharger
GABON – MEF – Laissez-passer – 20200410 Télécharger
To support companies to implement all the guidelines and interface with the forest administration (the COVID unit that has been set up at the Ministry of Water & Forests), WhatsApp groups have been set up, notably :
- The MINEF-SYNDICATS group (Ministry of Water & Forests with the UFIGA, SIAG and UFIAG unions). In this group the directives are sent to the unions as well as documents and the unions can exchange with the Minister, the Delegate Minister and the DG Forests and DG Industries on the directives, implementation issues, obtaining passes, etc.
- UFIGA has enlarged its UFIGA and DG members group to include DGAs, Site Directors and DFs, a group in which UFIGA informs its members, collects data, transmits documents, centralizes problems to exchange on the WhatsApp MINEF-SYNDICATS group.
- The General Management of Industries has also set up a group bringing together trade unions and companies, whether or not members of a trade union. The documents or information published in this group are relayed in the UFIGA and DG members group.
Almost 5 months have passed since the beginning of the pandemic which began in Wuhan and continues to spread globally. Shipping and freight is a vital issue for all countries, because their operations allow for the delivery of food and medical supplies to many countries.
As the PMI index for March improved significantly compared to February, the smaller decrease in exports and imports in March compared to the first 2 months does not mean that China’s economic activity has returned to normal, particularly in view of the global economic collapse.
« Official Chinese data shows shipments of containers were down 19.8% in February, compared with a year earlier, » With the end of containment and the gradual resumption of operations in March, the Wall Street Journal reported that Chinese ports were again carrying a significant number of containers, many of which have been blocked since early January.
The effects of the disruption in the supply chain have resulted in fewer shipments of goods from China (the impact is seen in shortages of medical masks and gowns, for example). This has resulted in a shortage of containers in many places and has blocked exports. 80% of China’s wood processing industry depends on imports. If for the moment the recovery of activity is mainly based on the cumulative stock in 2019, on the other hand the current situation due to Covid-19: reduction of logging in many countries, closure of some ports, increase in the prices of containers, sea freight and the price of the raw material wood, will have a significant impact on the transformation industry. According to the director of Panpan Mumen, Liu Jingjun, « The cost of labor, processing and logistics will be also higher and it is expected that the growth rate prices of wood products in China to be more than 30%. »
According to a report by McKinsey & Company, it will take up to 3 years for the US economy to recover from the COVID-19 coronavirus pandemic. In its April 8 publication on the effects of Covid-19 on world trade in wood products, the GWMI reports that « lumber demand, production will be slow in H2 and much of 2021. » Furthermore, « With millions of Americans already out of work and continued job losses exceeding that of the Great Recession of 2009, U.S. gross domestic product is projected to decline by eight percent in 2020.» Because of the strong involvement of the products industry in the housing, manufacturing and consumer goods economy, the likely impacts over the next two to three years include reduced construction activity, reduced tree planting, national and international recession, home renovation, pulp demand, and global trade in wood products.