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Forest Products Boom For Riga
[Apr 18, 2023]



According to the data of the Freeport of Riga Authority, forestry and timber industry cargo were the largest cargo group transshipped in the port of Riga last year, the said cargo being handled at 15 stevedoring company terminals. In 2022, the transshipped 5.5 million tons of wood products accounted for 23% of the total cargo turnover of the port.

2022 has been a challenging year for all sectors, and according to Kristaps Klauss, Vice President of the Latvian Forest Industry Federation it was a force majeure year for Latvia's forestry and wood processing sector. “All changes in the industry markets in 2022 are unequivocally caused by the Russian war in Ukraine. Before the war, Russia, Belarus and Ukraine provided Europe with about 60% of birch plywood consumption, 10% of conifer board consumption and one third of pellet market volume. With the outbreak of war, sanctions and the disruption of timber supplies from these countries, the market raised the prices of wood products to unimaginable heights. At the end of the year, we experienced an equally sharp drop in prices caused by the recession in the world economy, the collapse of the construction market and the overproduction of timber,” said K.Klauss.

The situation in the forestry and timber industry sector of Latvia, as well as in the global markets, is accurately reflected in the performance indicators of the Port of Riga - last year there was a 12 % drop, at the same time the growth indicators for the turnover of various cargo were different.

In 2022, the volume of wood chips cargo transshipped in the port of Riga increased (+11% compared to 2021), which might be explained by the warm winter, as a result of which the local consumption of wood chips decreased and exports could grow. In addition, the increase in exports was also accounted for by wood chips, which were not processed into granules. At the same time, in 2022, 2.09 million tons of wood pellets were transshipped in the port of Riga (-28% compared to 2021), that might be attributed to the high prices of wood raw materials in Europe, significantly affecting the production volumes of pellets in the domestic market and the total export capacity within the relevant segment.

The increase was registered for general timber cargo (pulpwood, boards, saw logs), mainly due to the increase in exports of pulpwood to Sweden and Finland, which, according to experts, conducted a very aggressive procurement policy in the Baltic States, due to lack of supplies from Russia and Belarus.

For several years now, there has been a tendency in the Port of Riga - to increase the volume of saw log imports from Scandinavia. “Our sawmills are so powerful and competitive that saw logs are purchased not only in Latvia, but also abroad. Although transportation costs are large enough, the current price level provides a basis for importing this product from Sweden and Finland,” explained the Vice President of the Latvian Forest Industry Federation.

Assessing the prospects for forestry and timber industry cargo for this year, Kristaps Klauss emphasized: “The wood energy consumption in Europe is increasing, and the timber industry believes that the market will return to normal, the prices of wood chips and firewood will go down to a reasonable level, production will be improved, pellets will be produced again and we will be able to export them.” This is also confirmed by the data compiled by the Port of Riga for February 2023 - compared to January a slight increase was registered in the group of forestry cargo, specifically in pellets and timber general cargo groups, while the drop was registered in wood chips cargo volume.

“At the same time, it would be na´ve to hope for a significant increase in cargo volumes at ports, because the war is still going on, and sanctions have not been lifted”, added K.Klauss, being quite cautious in his forecasts. “Belarus and Russia were important wood suppliers, which together accounted for one million out of three million cubic meters of total Latvian softwood exports. Therefore, there is no reason to be under any illusions that with the disappearance of raw materials from these countries, export performance and cargo turnover indices at ports could increase in the near future”.

At the same time, according to port analysts the results of the modern port have long ceased to be measured only in tons. Higher value-added cargo volumes are growing every year in the forestry segment, introducing new automated and digitized transshipment solutions, modern storage infrastructure, smarter and greener port equipment at the port, making port services more competitive in the market. Currently, every second timber terminal in the Port of Riga operates as a woodworking company, where timber gets added value when being processed, which is an important guarantee of the terminal's long-term strategy and strengthening of business positions.

Source: Drycargomag.com

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