Exporting Logs

[TezTheLogger656]

Hello Everyone. My name is Jacob. I am 27 and I am a Timber Buyer out of South East Michigan. I have been working in the woods since I was 16 and I am 4th generation logger. I recently Started my own business about a year ago buying and selling standing timber to a mill in michigan here. I have been hearing for years though about how much more the foriegn markets pay but my father keeps telling me that it is a pipe dream to try to export logs because you have to have very deep pockets to get started. I have done a lot of looking around online and tried to do as much research as I can about the topic and the process and it does not seem as easy as I thought. I would love to be able to expand my business and go for the top of the totem pole. What I understand is that a lot of the mills come out and give you a certain price for your veneer and your grade and then once it hits their yard they just stuff it in a canister and ship it and make money with out even running the logs over the mill for the most part. I am just curious to know if anybody in this forum has any experience with it or has heard stories or what not. Anyways I would appreciate any knowledge about the topic and thank you for taking the time to read this. I just became a member of this forum today and this is my first post. 

[Texas Ranger]

contracts, export license, buyer over yonder, shipping,  deep pockets needed

[TezTheLogger656]

contracts, export license, buyer over yonder, shipping,  deep pockets needed

The export license and finding a foriegn buyer that is trustworthy seems like it would be the biggest hurdles besides having the capitol to pull it off. I recently visited a website that I will not name just so my post does not get flagged but it was something along the lines of a export council or so and the membership fee was around 2k a year if I am not mistaken but from what I read is that with that membership they give you monthly statistics about foriegn markets and they hold seminars and even put on shows where you can meet with foriegn buyers yourself. I am not sure if the investment of 2k would be worth it or not but they seem to be big dogs in the export industry. I keep thinking it might not be a bad investment instead of trying to do everything myself and let alone trying to even find a buyer from overseas. I have much research to still do though 

[jmouton]

where in s. eastern mich are you ,,,   we buy logs from time to time,   

[TezTheLogger656]

where in s. eastern mich are you ,,,   we buy logs from time to time,  

I am located by Croswell if you have ever heard of it. About 20 miles North West of Port Huron.

[craigc]

Exporting Logs and Exporting jobs.

[Southside]

The way I see it how things were two months ago is very likely not to be how they will be in the future for a number of reasons.  Personally, I have come to the conclusion that exporting our raw goods to then import the same product back at a higher value added price is not in our best long term interest.  

[Klunker]

The way I see it how things were two months ago is very likely not to be how they will be in the future for a number of reasons.  Personally, I have come to the conclusion that exporting our raw goods to then import the same product back at a higher value added price is not in our best long term interest.  

This my line of thinking also.
There are lots of small mfg companies that still make wood furniture in the US of A, they must buy alot of wood.
I would think that the better plan would be to mill up the wood yourself instead of selling it to a mill.
Then Op could sell it to the mfg's direct and keep more of the profit himself.
As in all mfg businesses you have to be good at the game to be successful.

[stavebuyer]

You will need a concentration yard and ability to load containers. Have that and the buyers will find you. Of course you need to be prepared to be as ruthless and dishonest as the people you will be selling to and realize it will be a short term business. Do some research and have a clear understanding of the "claims" process and what your options are after a container of logs is rejected for not meeting standards once it reaches a foreign port. Used to be log containers were allowed to be fumigated at the Chinese port. That changed at the outset of the trade war; now it has to be done here. Between tariffs and fumigation much of the export saw log margins evaporated. You already live in the middle of the high end veneer market. Most of the best face veneer is sliced domestically. 

I have had plenty of offers to export and declined all of them out of principal as well as self interest. They are ruthless and predatory; don't for a second think they won't target you next.

Packaging timber sales is a niche. People that can accurately value and more importantly close a timber deal are the rarest of the rare. Stick with what you are doing and expand by buying the ground along with the timber. 

[Ed_K]

 I was a small time logger with a skidder and a tractor w/3pt winch and a small forwarder trailer. On a good week I could get out maybe 3 loads an a buyer showed up on my landing talking big money to sell to him. Big whirl wind of talk then I said I didn't think I could do it and he got real mean and said " you got a grapple on that tractor how hard could it be to stuff logs into a container". All I was referring to not having enough logs per week to do it. After that I told him NO and to leave my job site.
 Better to find domestic buyer's of veneer and get multiple bids from them. I think in the end you'd make the same $$ or more with less hassle.

[Firewoodjoe]

When I was hauling wood I had a guy come up to me and want to buy the whole load (20cord) right then and there. He didn't speak English good and didn't not want to take no for an answer. I finally had to tell him we are not selling you anything! It was kind of weird but I'm sure it could happen if you found that "good" needle in a hay stack. I know 2 mills that did it. Key word is "did". But I know nothing about it. Who knows why they quite. 

[moodnacreek]

Welcome. Figure out how to export with the buyers money.

[Skeans1]

The way I see it how things were two months ago is very likely not to be how they will be in the future for a number of reasons.  Personally, I have come to the conclusion that exporting our raw goods to then import the same product back at a higher value added price is not in our best long term interest.  

This isn't always the case, there's sorts we have for Doug fir as well as a few other species that will never come back to us called Temple sort and when the pay is double sometimes triple of what domestic is that's huge for a small guy. 

[Autocar]

Years ago I worked with a fellow filling containers for the over seas market. From my understanding the company that was purchasing the logs would put the money in a bank here in the states and when the container was at the dock the money would be released to him.Loading containers isn't a bad job once you figure out what works. I creased a side of a container while pushing a log into the box and the container company charged use $1500.00 this is what the guy I worked for told me. My dad use to get on me about selling logs overseas but I asked him would you sell your corn for three bucks a bushel or ten bucks to a overseas buyer. Never did get a answer ;).

[quilbilly]

We export all the time and have few issues. We are doing softwood and figure maple. We don't have deep pockets and only make a living. You will definitely need a yard and be able to load containers. 

Export buyers are generally ruthless, the ones you'd be selling too. If you could make the contacts and just be a middle man, where others are paying you to buy and load, that's the safest way, even if you might make less money being tied to a particular buyer. 

[logbyr]

Spent first 20 years of my career as a domestic  veneer buyer and enjoyed it thoroughly.  Globalization shut the mills I worked for down.  Chinese captured the furniture manufacturing and leveraged that into controlling the medium/low quality veneer log market.  Last 11 years I've spent mainly buying export logs and continue to watch the domestic guys get smaller or dissapear.   The export business hasn't got any easier over time.  Chinese demand much better quality as time goes on.  
The consumer does not value wood as much  now as paint grade is the rage.   Quality wo and walnut are most in demand woods domestically  and the market for these logs has the the domestic mills all at very slim profit margins do to insane competition for them.   I see more domestic mills moving to cutting less of their own wood and custom cutting for others as the investment return in logs gets slimmer or non existant.  The other option is shutting down.  The western world has lost over 1/2 of their veneer production since the early/mid 2000's.  Europe is down to almost none.  I'm not fan of exports but its next to impossible to survive without them.    
It's the consumer demand for cheap products and state sponsored/ low wage asian businesses that are driving the US wood mfg's into the ditch.   I can't change that on my level.   I hope this virus situation wakes up the country to importance of domestic manufacturing.  It will require consumers valuing the "made in USA items."

[moodnacreek]

Logbyr, nice to read a post from an experienced  man.  Consumers buying domestic will never happen. It is kinda like recycling, everybody is for it but don't wait for them to clean and separate. The biggest problem is the stuff we import and don't want: eab, spotted lantern fly. covid 19.etc.

[peakbagger]

Years ago after the spotted owl shut down much of the cutting on the west coast, Chinese buyers headed to Maine and thought eastern hemlock was the same as western hemlock. Eastern hemlock was not in any demand in Maine so Sappi a local mill signed a deal to supply a large volume for the Chinese. They lined up a pile about 2000 feet long,several layers deep and 20 feet high along the waterfront. The first shipment was received in China and someone figured out pretty quickly that it wasnt the same and the Chinese walked on the balance of shipment sticking Sappi with a huge pile of wood. It sat on the waterfront for a couple of years until the city forced them to get rid of it.

Fast forward 30 plus years and I see the new generation of Chinese to move into Maine to make a killing have bought the former Rumford pulp and paper mill and the abandoned Old Town mill that they restarted. Supposedly they are going to be making pulp from hemlock in Old Town and ship it back to China to feed their papermachines. 

What goes around comes around ;)

[nativewolf]

@logbyr - sums up where we are right now.  We are cutting WO, ok WO..not super..but ok.  Demand has remained high for good material.  High enough to ship to Ohio, Michigan, etc from Virginia.  I don't see how a logger makes any money in good hardwoods without taking every dollar possible.  It works out to a 50% increase in sales.  HOWEVER...it is not always the best route.  Sometimes a domestic buyer is the best option and we have a USA mill that buys our quartersaw grade logs (logs that are large but not veneer grade-2 or 3 sided saw logs).  

This summer/fall we'll switch to a stand with great WO and I am a bit concerned with the markets, we'll see.

[snowstorm]

Years ago after the spotted owl shut down much of the cutting on the west coast, Chinese buyers headed to Maine and thought eastern hemlock was the same as western hemlock. Eastern hemlock was not in any demand in Maine so Sappi a local mill signed a deal to supply a large volume for the Chinese. They lined up a pile about 2000 feet long,several layers deep and 20 feet high along the waterfront. The first shipment was received in China and someone figured out pretty quickly that it wasnt the same and the Chinese walked on the balance of shipment sticking Sappi with a huge pile of wood. It sat on the waterfront for a couple of years until the city forced them to get rid of it.

Fast forward 30 plus years and I see the new generation of Chinese to move into Maine to make a killing have bought the former Rumford pulp and paper mill and the abandoned Old Town mill that they restarted. Supposedly they are going to be making pulp from hemlock in Old Town and ship it back to China to feed their papermachines.  

What goes around comes around ;)

i remember the hemlock log deal. i sent some seems like it went to portland. before that haynes was shipping it out of eastport along with pine. 30 yrs ago it may have been scott paper. before sappi bought the mill. most of the paper from rumford stays in the us. some from the chinese mill in woodland goes to china

[Wudman]

If you are considering exporting, work through an established reputable broker.  He will take a bit of the cut, but will provide some protection to you.  If you try to work directly with an oversees buyer, you will get skinned.  You should be paid when the wood hits the port.  Otherwise, odds are you will never see a payment.  I'm not a fan of exporting, but we did some to survive after the Global Financial Crisis of 2008.  There was some margin to be made.

The export business highlights the inequities in trade around the world. My buyers would not buy finished lumber (I was shipping construction grade pine logs - lumber was being used for concrete forms).  There was $150+ per ton in freight in those logs when they arrived at their destination.  Nice pallets of dried 2x4s would have been much more cost effective to ship, but we couldn't make that happen.  I even shipped pine pulpwood 1/2 way around the world to be shaved for horse bedding......I supply a local shaving mill with raw material that could have bulk shipped dry shavings, but we couldn't make a deal on that either.

The Germans weren't too bad to work with.  The Middle East was ok working through a broker.  Vietnam was tolerable.  The Chinese were crooks.

I personally am an America first individual.  Green products shouldn't be moving more than a hundred miles from home.  I check labels and don't buy from China when I have a choice.  I hope this Covid situation breaks our reliance on China......but I don't have much faith that it will.

Wudman

[stavebuyer]

I mentioned "claimed" in my previous response. There are lots of far eastern buyers that want to know "how many containers a month" can you supply? There is some money on the table and they will offer to come by inspect and pay on the spot for the first order; then they want to wire you money on your numbers for all the rest. Which works fine until it doesn't. Two main issues. One is being "claimed". The money paid is always subject to buyers inspection when they receive the logs if you are the "exporter". Been known to happen that as market changes, orders filled, logs degraded in transit can be charged back to the seller. Its in the fine print,somewhere filed with an export bank and now they debit your account 3 months after you loaded and were paid for the logs. Also its common that one large order exists for 50 containers a month and there are a dozen intermediate guys all hustling to fill it. You have loaded and been paid for several containers as promised. Then two warm weeks in spring and some log yard closer to the port sells 20 containers to "your guy". You get the phone call...no more logs needed after being promised last week your good through July. Now you got logs on the yard, logs you have spoken for in woods and all your suppliers are mad at you as the local mills that wanted those logs all winter sincerely hope you enjoy the taste of eating what you can't sell.

[logbyr]

Was thinking about the domestic guys driving down road today.   Here's domestic hardwood veneer slicing mills closed since 2000 in Eastern US
Atlantic veneer at Beufort, NC
West Point veneer, West Point, VA
IVC - South Hill, VA
Erath veneer - Rocky Mount, VA
Dean Co - Princeton, WV
Genwove - Indian Trail, NC
Interforest - Darlington, PA
Add two more in eastern Canada
General Woods and Veneers- Montreal
Interforest-  Durham, Ont.

All accept Erath big mills running 6 slicers 2 shifts/day.   
A few other smaller mills also shut their doors in this time frame.  
Nothing new opened in this time frame in US or Canada.

[nativewolf]

Yep, a shrinking list.

Atlantic is still buying but having Danzer and another firm slice for them I think.  
IVC now slices only in Mercer PA but South Boston is still a sales office I think.  

I think a few German operations opened (and maybe closed) in the last decade but I'd have to check.  

All in all it is why I gladly welcome the export veneer buyers, many like you I guess.  In the medium term what we need to see is a change in consumer preferences back to wood cabinets and away from Paint.  NYC market is the place to see that happen (it is where I saw paint replacing natural wood).  Ikea and painted cabinets have done more to damage to the hardwood market than anything else I think.  When woodcroft is buying cherry veneer plywood...the game is back on.  

[quilbilly]

Not to get off the subject too much but if foreign folks are willing to pay more than domestic, well that puts a guy in a bind. It's easy for people in the mill business to get up in arms about exporting but the timber owner should be able to make top dollar for their wood, not take a cut simply to make sure someone else has a job. Although it's a pain, I've heard Canadians exporting public timber have to advertise it for sale and if a domestic buyer wants it they get first choice, if they can't meet the asking price then it can get exported. 

If you start the export thing, Chinese are definitely the worst. Not even close. Make sure you get paid as quickly as possible. Preferably when they're loaded in the container before they hit the port. It's hard to negotiate that but if you can, do it. We got burned one time on a special order of 60' temple logs. After we had received them from the timber company and had them in storage at the port, waiting to get loaded, the buyers came in and wanted to renegotiate and pulled out when we wouldn't. 

[logbyr]

Native wolf

Correct about Atlantic but it's still one less mill producing logs.   
I'm sure Danzer is glad to have the slicing business.   They laid off 3 long term experienced log buyers last month, sold their timberland and have their sawmill in PA up for sale.    It's not good out there.
Danzer was the big dog in world veneer production for a long time
ITV in Mercer is in virus shut down and also not currently buying logs.   
We need a domestic industry here that is growing not shrinking.   It gives us leverage with the Chinese on our resources.  When they captured the furniture making market they drove the price of low end veneer produced here to production cost or below.     The domestic furniture industry did not bite the hands that fed them wood like that.  If they drive the US veneer mills all out log prices will suffer.
As for getting wood more in demand, i think the HGTV, DIY and home improvement shows are very influential in trend setting.    The " fixer upper" lady from TX was the big driver in painted cabinets.   Women who make most of the furniture and cabinet decisions love the shows.  
  The industry associations should be promoting shows that showcase natural domestic woods and their sustainability.   
Possibly get a little younger version of Norm Abrams doing house remodels showing off domestic wood products.  

[Wudman]

As for getting wood more in demand, i think the HGTV, DIY and home improvement shows are very influential in trend setting.    The " fixer upper" lady from TX was the big driver in painted cabinets.   Women who make most of the furniture and cabinet decisions love the shows.  
 The industry associations should be promoting shows that showcase natural domestic woods and their sustainability.  
Possibly get a little younger version of Norm Abrams doing house remodels showing off domestic wood products.  

A large sweet potato producer just south of me did that exact thing to get a foothold in the European Union.  Sweet potatoes were not a desired item in Europe.  He hired an established TV Chef that started promoting sweet potato dishes on his show.  They built a business around this marketing.  Maybe the talent on this board could start a YouTube marketing venture and rebuild the U.S. domestic market.  There is certainly plenty of talent here. 
Wudman

[Dom]

Years ago I worked with a fellow filling containers for the over seas market. From my understanding the company that was purchasing the logs would put the money in a bank here in the states and when the container was at the dock the money would be released to him.Loading containers isn't a bad job once you figure out what works. I creased a side of a container while pushing a log into the box and the container company charged use $1500.00 this is what the guy I worked for told me. My dad use to get on me about selling logs overseas but I asked him would you sell your corn for three bucks a bushel or ten bucks to a overseas buyer. Never did get a answer ;).

The process for payment sounds like a letter of credit. The U.S. has a different term which I don't recall at this moment. Essentially a contract is drawn and agreed by the buy and seller. The contract is represented to a bank, and that bank will provide a destination bank for the buyer. Not all banks work with one another. Once the shipment is received, the buyer will either approve or deny the shipment and communicate with their bank. If denied, pending on the contract, that can mean that the shipment is returned right away. If approved, the banks will transmit payment. 
If letters of credit are used for payment, its best to have pictures sent to the buyer and have them acknowledge that they will accept the shipment as long as it is the truthful shipment. 
With letters of credit, the seller can also protect the transaction by purchasing a insurance that payment is provided as soon as the container reaches the customer. The insurance is not pending whether the approval or denial of the customer.
We sold skidders to Chile in 2008 due to a lack of local market. 
Never had an issue with the letters of credit, but  a good contract and good documentation are required. If I were to buy or sell internationally with a unknown stakeholder the letter of credit is the only form of payment I would use.
I hear on the news of local businesses getting screwed up by foreign companies (and local) and often wonder what protective measures they took. If any.

[Southside]

Now you got logs on the yard, logs you have spoken for in woods and all your suppliers are mad at you as the local mills that wanted those logs all winter sincerely hope you enjoy the taste of eating what you can't sell.

Yup - there was an outfit exporting ERC last year to China, paying foolish money for the logs, so much that I could not buy them and make anything off of the lumber.  Have to admit I did grin when that short term game came to a screeching halt for them.  

[logbyr]

Most of the hardwood export log business is cash before shipment.   
US brokers and Chinese buyers all pretty much pay before possession is taken. 
In past some big shippers shipped on Letter of credit (LC) with Chinese banks.  These were proven worthless after the fumigation debacle  the Chinese threw at us 2 years ago.    This has forced more log producers to ship logs that are paid in full.    Unless u have trustworthy representation in asia never ship without payment.
I contract buy for a co in China.   Pay for logs before shipment then our people in China collect money after customers receive logs.   They know how things work there and who to trust.  I dont.  It's a very different culture.   Their moral compass doesn't operate like ours.
Claims are always an issue in asia.   They will always be an issue.   Best way to deal is to ship to spec and stand your ground when they complain.   They are born negotiators.   

[Dom]

Most of the hardwood export log business is cash before shipment.  
US brokers and Chinese buyers all pretty much pay before possession is taken.
In past some big shippers shipped on Letter of credit (LC) with Chinese banks.  These were proven worthless after the fumigation debacle  the Chinese threw at us 2 years ago.    This has forced more log producers to ship logs that are paid in full.    Unless u have trustworthy representation in asia never ship without payment.
I contract buy for a co in China.   Pay for logs before shipment then our people in China collect money after customers receive logs.   They know how things work there and who to trust.  I dont.  It's a very different culture.   Their moral compass doesn't operate like ours.
Claims are always an issue in asia.   They will always be an issue.   Best way to deal is to ship to spec and stand your ground when they complain.   They are born negotiators.  

Getting paid upfront is the best. In the end it comes to either the buying and selling power. Sounds like the sellers have good power, that's a good position to be in this case. 
The construction companies argue every contract in our area, maybe we should have them negotiate with Asia.  :D
Its dangerous when only dealing with a few customers. Strong negotiators tend to want to become the main customer,  and squeeze out profits afterwards.
I'm not a good negotiator or seller, so I try to reduce risks in another other ways I can. That sometimes mean selling a at lower profit, but guaranteed sale/payment.

[teakwood]

When i sell teak to an Hindu buyer it's money up front. we load the container in my yard, measuring volumes which decides  the price and then it's paying first, and just if the money is in my bank account the trucks leaves my land. If you let them go before you will never see a cent! 
 Well, actually i have ONE hindu buyer which pays me after the truck left, but that guy has never failed me, 1h later the money is deposited. but he is an exception, very trustworthy person.  

[Walnut Beast]

Talked to a guy that did quite a bit of container shipping several years ago and he said he had many sleepless nights with some big money on the line. Believe it or not he did quite a bit of Cottonwood years back besides Walnut 

[barbender]

I would think a guy could send lots of containers of cottonwood out without losing any sleep about it😁

[Walnut Beast]

Wasn't the logs it was all the variables and costs in the shipping 

[barbender]

I can believe that. I'm just ribbing ya, anyways. Even if I sent cottonwood logs out I'd want paid for them, they didn't get in the container for free.

[ehp]

I have seen cottonwood sawn into slabs for table tops and you know what , they didnot look to bad . Lots of big cottonwood here 

[ehp]

there was some shipping this winter but the logs had to be just about perfect and I mean perfect , white oak and walnut were the most common