“Timber’s a funny market,” says Peter Foster, managing director at Ahlmark Shipping (UK), which operates vessels from Sweden into Hull, Boston, Rochester and Montrose in Scotland. “No-one seems to be able to forecast it.”
This lack of insight doesn’t seem to be hampering shipping volumes. Ahlmark reports a 30% increase in sales volumes from January to April this year, with further growth in May – despite rising oil prices and consolidation in the UK ports business.
“The industry is still suffering in that more and more ports want to close in order to be redeveloped for commercial housing, particularly in the south-east,” said Peter Millatt, managing director of Scotline, the liner that started life in 1981 carrying Swedish packaged timber from Varberg to Inverness, and which now has regular sailings to Goole, Rochester, Hull, Newport, Shoreham, Belfast, Wicklow & Cork.
Recent press speculation has centred on the possible closure of Chatham Docks: this handles a million tonnes of cargo, a large percentage of which is timber.
“As a shipping company, this means there is less opportunity to have competitive ports,” explained Mr Millatt. “We are being squeezed more into bigger ports where you suffer from the restrictions of a big port culture – restricted working conditions and higher costs.”
It’s less of a problem for Scotline, which has its own terminals at Rochester, Goole and Inverness. “This gives us a great deal of control,” said Mr Millatt. “We are looking to expand, but the land prices in the south-east are rocketing and industry just can’t compete against residential housing. There’s plenty of business, but there’s not the amount of facility we require.”
Ahlmark, too, runs its own terminal at Hull. With as many as three to four vessels calling at the port each week, the company operates dedicated berths at King George Dock where three vessels may be handled at the same time. The annual throughput at the terminal is around 450,000m3 of wood products.
Maximising efficiency
It’s been a big move for Ahlmark, which has been operating for 159 years. “Our ships come into our own terminal, which means we have direct control and are closer to the customer,” said Peter Foster. “This has helped us to maximise efficiency and reduce costs – as well as protecting the cargo. For such an old company, we are probably late into it, but it has been a big change for us, moving away from third-party operators to owner control.”
Ahlmark also has exclusive use of five large warehouses where the goods are stored in transit up to final delivery, although the company is increasingly shipping timber for quick turnaround to customers who need supplying just-in-time.
While Swedish exports look buoyant, figures last year put exports from the Baltic states to the UK down by around 20% – a situation that seems to be continuing. Much of the timber coming out of the Baltics is more value-added, which means more protection in transit.
Meanwhile, rising oil prices have had a major effect on freight rates. Scotline reports its average oil price in 2004 was £140 per 1,000 litres; the average for 2005 was £240; while at the moment, prices are sitting at £310 per 1,000 litres.
“We have to pass these costs onto our customers,” said Mr Millatt. “But our customers are saying they can’t pass them on to timber end users who aren’t prepared to pay more; ultimately they are going to have to.”
