Transport crunch spurs West Fraser Timber to curtail lumber production

Massive flooding late last year that washed away rail tracks and shut highways in Western Canada forced one of the nation’s biggest lumber producers to curtail output.

West Fraser Timber Co. said in a statement that while repairs to rail and truck routes in British Columbia are progressing, its ability to “ship products in a timely manner remains challenged.” The company said it was forced to take “unscheduled downtime” due to the transportation constraints.

The cutback in production from a major supplier threatens to further boost lumber futures that have already risen 32% this month amid tighter supplies ahead of peak building season. That may add to the housing inflation that’s already hurting buyers.

The magnitude and duration of the disruptions remains uncertain and the company may need to further reduce operating capacity to manage its inventory levels. Lumber and plywood shipments declined 20% in January from the year before and pulp shipments dropped 30% during the same time period, the company said.

“The situation has also resulted in significant delays in shipments of orders,” West Fraser said in the statement. “It is not possible to estimate when full transportation services will be available or when the backlogs resulting from the interruptions will be cleared.”