Timberland Investment

British Columbia’s major lumber producers continue to book substantial profits on near record lumber prices almost a year after the U.S. Department of Commerce first hit Canadian producers with punishing duties.

The benchmark price for 1,000 board-feet of top-quality western Canadian two-by-fours hit US$540 about a month ago, according to the trade publication Madison’s Lumber Reporter, compared with US$315 at the start of 2017 before U.S. interests re-ignited the ongoing trade dispute.

Bottlenecks in rail transportation plaguing all industries are one reason lumber prices have spiked so high, but solid demand has also allowed producers to simply pass the price of tariffs along to consumers in prices, said Susan Yurkovich, president of the B.C. Lumber Trade Council.

“Who knows how long these prices will hold, but for now (they are) mitigating the impact of duties for Canadian producers,” said Yurkovich, who is also CEO of the Council of Forest Industries, one of the forestry sector’s main industry groups.

The U.S. Department of Commerce levelled preliminary duties against Canadian lumber producers last April, on the complaint of the U.S. Lumber Coalition following expiry of the last Canada/U.S. Softwood Lumber Agreement.

Final duties were set last fall at between 20.8 per cent and 22.1 per cent, depending on which company it is, and so far, Yurkovich said it is consumers that have felt them the most.

The Molpus Woodlands Group, LLC (Molpus), a timberland investment management organization headquartered in Jackson, Mississippi, has, on behalf of a client, successfully purchased approximately 26,739 acres of timberland in the four southern states of Alabama, Mississippi, North Carolina, and South Carolina.

These historically well-managed timberlands, with broad geographic distribution across four southern states, have been under industrial timberland management for over 75 years, and provide exposure to multiple timber markets that represent the broad spectrum of pulp, paper, lumber, and panel producers located across the southern U.S. Most of the properties have frontage on public roads and provide habitat for a variety of wildlife species, including some of the major game species for the region.

“We look forward to adding additional properties under management in the southern U.S. where we already have a strong presence,” said Ken Sewell, Chief Operating Officer of The Molpus Woodlands Group, LLC. “These properties provide our client with good exposure to areas with long histories of successful commercial timber production, and they offer strong recreational opportunities to the region as well.”

Molpus currently manages approximately 2.1 million acres of timberland investments in eighteen states.

Forest and Wood Products Australia have produced a new report that examines remote controlled and autonomous machinery in forestry. The report was compiled Rien Visser, of the School of Forestry, University of Canterbury, New Zealand. Logging provides some excerpts from the document. Technology development, in terms of both capability and cost-effective integration, is moving at a fast pace. While advanced robotic systems are already commonplace in controlled workspaces such as factories, the use of remote controlled or autonomous machines in more complex environments, such as for forest operations, is in its infancy.

While technology integration and automation in forestry equipment are commonplace, the report focuses on equipment developments and opportunities where no operator is in the machine. The simplest form is remote control of the machine where the operator, typically in clear line-of sight, will work with wireless controls. While teleoperation is simply a more technical term for remote control, often implied is that the operator works from a virtual environment with live video and audio feedback from the machine. Since teleoperation provides a similar operator experience to working in the machine, it is relatively easy for an operator to transition to teleoperation.

For both systems the machine operation is typically slower, significantly so if the task is complex, and will not be adopted in forest operations strictly based on productivity improvements. However, benefits can quickly accrue when: (a) operator safety might be compromised, (b) where a full-time operator would be underutilised, or (c) where work sites are onerous to reach or suitably qualified operators are hard to find

Agriculture and timberlands investor New Forests Asset Management has made an additional equity investment in Malaysia’s Acacia Forest Industries (AFI), which owns a eucalyptus plantation in Sabah, for an undisclosed amount.

The investment in AFI over the next five years will be made through New Forests’ Tropical Asia Forest Fund (TAFF) and comes nearly five years after the fund’s initial investment in the Hijauan Group, whose subsidiary Hijauan Bengkoka Plantations Sdn Bhd (HBP) is a joint shareholder of AFI.

TAFF is a $170-million fund that launched in 2012 as the first forestry fund dedicated to sustainable forestry in Southeast Asia. The fund has since taken equity positions in three forestry businesses in Malaysia, Indonesia, and Laos. These investments include more than 150,000 hectares of land with the target of managing and establishing more than 60,000 hectares of certified plantation forestry. Headquartered in Kota Kinabalu, AFI owns plantations on the Bengkoka Peninsula of northern Sabah. From 2015, it switched from planting primarily Acacia mangium to Eucalyptus pellita, a crop that offers additional market versatility and better resilience to locally prevalent tree diseases.

New Forests said the fresh investments will allow AFI to continue to execute its strategic plans for improving plantation quality and transitioning the company to a higher value sawlog production model.

Through the course of the last year, AP3, the SEK345.2 billion ($42.2 billion) Third Swedish National Pension Fund, scaled back on hedge funds and boosted its internal portfolio construction capabilities. The fund also continued steadily building its alternatives portfolio, where chief investment officer Mårten Lindeborg sees a stronger risk/return ratio than in equity.

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He notices an increasing need to move quickly and react to short-term factors to achieve alpha. Also, since 2010, he has steadily increased AP3’s allocation to alternatives, in line with his belief that the risk return is better than in equity. About 20 per cent of the fund is now in alternatives.
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The allocation to alternatives includes infrastructure, private equity and insurance risk. There is also a 1.5 per cent allocation to timberland – which is proving big enough to be a worry.

Strong returns from forestry in Sweden, Australia and New Zealand have not been matched by timberland assets in the US and emerging markets. Lindeborg attributes this to emerging-market currency issues.

“We are not that highly exposed to emerging markets, but on aggregate, we have to reconsider and rethink our timber strategy,” he says.

The University of Alaska is negotiating a timber sale on more than 13,000 acres of its land in the Haines Borough. The estimated volume of the 10-year deal is far greater than any timber sale in the Haines area in recent history.

The university’s 13,426 acres are scattered throughout the borough. Most of that acreage is located across the Chilkat and Klehini Rivers or across the Chilkat Inlet from Haines.

That includes a piece of land near the Davidson Glacier and a few smaller portions close to town.

The university says it received interest in the timber on its Haines parcels, and is entering into a 10-year negotiated sale.

Christine Klein is the chief facilities and lands officer at the university. She spoke at a Facilities and Land Management Committee meeting on Tuesday.

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The sale is estimated at around 100 million board-feet.

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That goal trumps the size of other recent Haines-area timber sales. In 2015, the state Division of Forestry moved forward with the Baby Brown Timber Sale. At 855 acres and 20 million board-feet, it was set to be the largest sale in the Haines State Forest in 20 years. That sale was delayed after a successful appeal of the land use plan. The state is preparing to put it back out to bid.

The Board of Regents approved the development and disposal plan for the university sale at a meeting this week, authorizing it to move forward.

As we get into the swing of a new year, the lumber market continues to feel the collaborative effects that helped drive southern yellow pine (SYP) prices to sustained high levels throughout most of 2017. Forest2Market’s southern yellow pine lumber composite recently hit its highest level ($450/mbf) since we began compiling the data over eight years ago.

Multiple factors are contributing to these high prices, including:

In November 2017 the US Department of Commerce (DOC) ruled that duties would be imposed on imports of Canadian softwood lumber. The DOC slightly tweaked the final numbers in early January, which will range from roughly 10 percent to nearly 24 percent—lower than the preliminary range of 17 percent to 31 percent.

Last year’s catastrophic wildfire season, mountain pine beetle infestation and the devastation from Hurricanes Harvey and Irma continue to affect US lumber supply and price. Tight demand has driven log prices in the Pacific Northwest to record highs and no end is in sight; profit margins at regional mills have decreased as a result, making PNW producers less competitive in the North American market.

Beginning in December 2017, the U.S. Federal Motor Carrier Safety Administration began requiring many freight carriers to install and use electronic logging devices (ELD) that integrate with a truck’s engine and record engine run time, mileage and other operational information. The mandate aims to make roads safer by limiting professional truck drivers to 11 hours of driving during a 14-hour period each day. While this change won’t likely affect loggers, it will affect interstate transportation; a shortage of available driving hours would boost freight rates, and many businesses may have trouble finding independent drivers or may have to pay more when they do.

The North American Free Trade Agreement (NAFTA) is also on the radar as we head into President Trump’s second year in office. The odds of the President leaving NAFTA untouched are not particularly high in the near term, but the US, Canada and Mexico are still at odds over a number of important points; the latest round of talks resulted in little headway.

Another year of sustained high lumber prices in 2018 will also not do much to help an already tight housing market; high prices are forecast to add over $5,000 to the cost of a new US home.

The composite southern yellow pine lumber price soared well above the $400/mbf mark throughout January and into February. Week 5’s price was at $450/mbf, which is up sharply from week 4’s $427/mbf mark. Week 5’s price is 12 percent above its January 2018 starting point of $402/mbf, and 18 percent above the 2017 week 5 price of $381/mbf.

Cryptocurrency is making headlines again—this time, in real estate. A pilot program in South Burlington, Vt.—initiated by global blockchain real estate marketplace Propy Inc.—marks the first U.S. deed recorded using only blockchain technology, according to multiple sources. In this case, Ethereum was used to transact and record contracts and documents instead of using the city’s recording system.
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The pilot program was announced in January in partnership with the City Clerk’s Office of South Burlington. City representatives say Vermont’s legislation lends flexibility to blockchain use in real estate transactions.
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If these blockchain pilot programs prove successful, brokerages may be more willing to transact using cryptocurrency. RE/MAX Action First in Tampa predicts that the technology is set to disrupt the industry and is prepared to embrace the use of cryptocurrency in real estate, stating transactions could be settled in minutes instead of multiple days or weeks. The brokerage is one of the first in Tampa Bay to accept and use cryptocurrency in real estate transactions.

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In Sweden, the mapping and land registration authority is moving forward with blockchain technology, using cryptocurrencies to conduct property sales. It expects to complete the first transaction in the next few months, according to the Wall Street Journal. The practice becoming more commonplace overseas may signal to widespread use in U.S. real estate transactions in the near future; however, with volatility and security still at the forefront as major challenges, blockchain needs to make strides to bridge the gap and assuage consumers’ fraud-based fears.

For the past 18 months, Eddie Martin has been trying to find ways to keep the affordable homes he builds, well, affordable.

About 40 percent of the Texas homebuilder’s framing lumber comes from Canada. The Trump administration slapped punitive tariffs on Canadian softwood timber last year, claiming the industry is unfairly subsidized. The move has driven lumber prices to near record highs. Tilson Home Corp., where Martin is president, has so far refrained from passing on the added costs to homebuyers. To do that, it’s cut back the number of home plans it offers and is considering swapping pricier fir for cheaper Southern yellow pine, even though its tendency to bow in the Texas humidity makes it more difficult for construction crews to work with.

“If it stays up and we feel like we need to try and raise the price to try and recoup some of that, it’s very difficult for us as a company,” says Martin, whose business builds about 400 homes a year across the state. “It’s imperative we keep our prices in the range where we can sell the house.”

Framing lumber, including installation costs, accounts for about 18 percent of the average home’s selling price, according to the National Association of Home Builders. The rising price of timber comes at a bad time for U.S. builders, which are already contending with labor shortages and scarce supplies because of summer wildfires that wiped out some timberland in British Columbia. “You’ve got the kind of perfect storm brewing for the homebuilder,” says Jim Barbes, vice president of national sales at 84 Lumber Co., one of the nation’s largest building-supply chains.

On Nov. 2 the U.S. Department of Commerce announced average import duties of 21 percent on shipments of timber from Canada, which supplies more than a quarter of what American builders use each year. The price of one type of lumber futures contract that’s a widely watched industry metric has surged 31 percent in the past 12 months, and it’s trading at the highest level in at least 32 years. “So we’re talking about the potential not just for a record-setting year, but one that is unprecedented,” says David Logan, director of tax and trade policy analysts at the National Association of Home Builders.

The import duties leave companies paying $1,360 more to build a single-family home. Many builders have started to raise their prices to keep profit margins stable, says Bloomberg Intelligence analyst Drew Reading, but their ability to pass on the added costs will be tested as mortgage rates start to rise.

Builders are trying to find as many efficiencies as they can to reduce costs, including changing the design of roof systems, wall panels, and floors to use the least amount of material possible while still meeting building codes, says Barbes of 84 Lumber. They’re also shifting to smaller starter homes with simpler floor plans and multifamily dwellings to save money, he said. The Pennsylvania-based company uses designers who, with the help of software, can calculate the loads to optimize the wood or wood framing while ensuring the quality of the home isn’t compromised, he says.

Taylor Morrison, a Scottsdale, Ariz.-based company that expects to build 8,000 to 8,500 homes a year, is constructing wall panels in factories before they’re shipped to the job site to reduce lumber waste, says Alan Laing, executive vice president of homebuilding operations. Companies such as his will probably start to look to alternative materials like steel and concrete if lumber prices continue on an upward trajectory. “If this is a record year,” he says, “it’ll spawn innovation like anything does when something becomes unaffordable.”

Pistachios and almonds are helping Dallas police and firefighters' retirement accounts these days, but too many other Dallas Police and Fire Pension System investments are paying peanuts — or worse.

The troubled $2.1 billion pension fund over the years sunk hundreds of millions of dollars into unusual investments such as raw land in Idaho, Asian infrastructure, taxis, oil and gas and South African timber.

Untangling those investments — made by previous pension leaders — is now the focus of the new pension board, which has delved into its portfolio in recent meetings. Some of the board members, such as new board Chairman Bill Quinn, were surprised to see just how nuts — he actually said "just crazy" — some of the past decisions appeared to be.

"I've been in the pension business with a lot of funds for a long time," Quinn said. "I just can't imagine how these things ever occurred. It's just mind-boggling that those kind of investments had been made."

Pension leaders say that they know they missed out on much of the bull market of 2017 because the fund wasn't invested enough in traditional equities. Officials said it's going to take several years to work their way out of some of the illiquid investments and move toward a more traditional strategy.

"We have to do it piecemeal," Quinn said. "You can't fire-sale these things. That would be worse. You get the value you can for it."

Until then, they'll deal with the assets they've got, such as:

• BTG Pactual, which manages timber in Brazil and South Africa for the fund.
• JPMorgan maritime and Asian infrastructure funds.
• Tens of millions in oil and gas.
• The North Texas Opportunity Fund, which is down to one asset: a Dallas yellow cab company, which now has to compete with Uber and Lyft.

Another heavy investment in the Hancock Agricultural Investment Group is actually paying off — but it's still not an ideal structure for the pension's leaders. The system fully owns the U.S. assets, which include row crops and apples and nuts. Quinn said such an investment is "a very unusual, strange thing to do." Hancock is reducing the size of the pension's portfolio.

Retired firefighter Sam Friar, who joined the board in 2011 and served as its chairman from 2015 to 2017, said he believes previous boards didn't have enough discipline, nor did they seek sound advice.

"There was really no structure to the investments in the past," Friar said. "It was kind of like somebody would come before the board and give a presentation. And if we liked it, we invested in it.

In May of 2011, Forisk published a study that evaluated the viability of the wood-based transportation fuel sector in the U.S. The study detailed 12 technologies and 36 projects that convert wood to fuels including ethanol, butanol, diesel, gasoline, and jet fuel. Forisk’s conclusion of the 2011 study:

“…wood-based biofuels will fail to contribute substantively to EPA’s Renewable Fuel Standard targets in 2011 or 2022.”

Revisiting the study in 2018 confirmed that wood-based biofuels have failed to develop commercially, despite conventional ethanol and biodiesel being produced at record levels—the U.S. produced 15,845 million gallons of ethanol and 1,592 million gallons of biodiesel in 2017. Of the original 36 projects, 19 were canceled, 9 were shut down, and 8 remain operational. Of these operational facilities, all are pilot or demonstration plants.
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Despite scientific progress, there were only 24 operating and advancing projects at the end of 2017, and at least 13 of these were pilot projects or demonstration facilities. Of the 4 projects with stated capacities of 10 million gallons per year or higher, none operate at a commercial level. The entire sector has a maximum potential capacity of 75 million gallons per year. This is less than the 392 million gallons of gasoline that drivers in the U.S. use in one day. Analysis of potential wood use highlights the change within the sector and the minimal relevance these projects currently have on the forest industry (Figure).

About 5,000 acres of forestland near Bonners Ferry will be preserved under a conservation easement in an agreement announced Wednesday by Idaho Department of Lands officials.

Conveyed to IDL in a partnership between Hancock Timber Resource Group, The Nature Conservancy and the U.S. Forest Service, the conservation easement will preserve forests for recreation, wildlife preservation and woodland management. Half of the preserved woodland is located near Hall Mountain and the other half east of McArthur Lake.

The view from the McArthur Lake East Forest Legacy Project, photo courtesy of The Nature Conservancy.

“Conservation easements and the Forest Legacy Program keep private working forests working,” said Karen Sjoquist, IDL Forest Legacy Program coordinator. “The continued use, protection and sustainability of these forests provide local jobs while protecting the social and environmental values that forests provide.”

Partnership planners identified the North Idaho acreage as prime candidates for conservation easements due to its natural beauty and vibrant natural life. The easement will establish permanent public access for hunting, hiking and berry picking while allowing land to be managed for timber harvesting, water quality protection, habitat preservation and other matters of public concern, including grizzly bear management.

U.S. consumption of softwood lumber is likely to reach record-highs by 2030 according to a new study from ForestEdge and Wood Resources International.

The study forecasts that U.S. softwood lumber demand will grow at an annual rate of 2.3 percent through 2030, which will be higher than the report's projection of real GDP. The study suggests that U.S. lumber consumption will reach an all-time high by 2030.

From softwood lumber consumption in residential housing, repair and remodeling, non-residential construction, material handling, ForestEdge and Wood Resources project that non-residential construction will grow at the fastest rate and will increase its share of the total softwood lumber usage from just over 11 percent in 2016 to almost 14 percent by 2030. Lumber consumed by the residential housing sector, including repair and remodeling, will continue to account for the almost 70 percent of the end-use market.

The Canadian lumber producers market share in the U.S. is expected to decline in the coming years, with the biggest reduction occurring between 2017 and 2025. The outlook for available log supply to the sawmilling sector will be different in the two major lumber-producing regions in Canada, with harvest levels falling substantially in British Columbia over the next ten years.

Overseas supply of lumber to the U.S. is forecasted to increase both in volume and market share by 2025, followed by a decline until 2030. Based on the study’s lumber supply curve analysis, the major supplying regions are likely to include Brazil, Chile, Germany and the Nordic countries. In the study’s High Demand Scenario, which projects a very strong rebound in housing starts, R&R, and non-residential construction, overseas supply will be crucial and reach a market share of over 10 percent by 2030.

Molpus Woodlands Group, a timberland investment management organization, has raised $116.4 million for its fifth fund, Molpus Woodlands Fund V, according to a filing with the SEC. The firm did not comment on its fundraising efforts.

Molpus Woodlands Fund V will invest in timber assets throughout the United States. The fund seeks to raise $500 million in total equity commitments, according to the filing.

The fund’s predecessor, Molpus Woodlands Fund IV, held a $662.5 million final close in 2014. Molpus Woodlands Group manages more than 2 million acres of timberland nationwide.

U.S. timberland investments have delivered a 10-year annualized return of 5.55 percent as of June 30, 2017.

Forisk projects U.S. softwood lumber consumption of 49.8 BBFT in 2018. This represents a 3.7% increase from our 2017 forecast of 48.1 BBFT and is 5.4% higher than 2016 actuals of 47.3 BBFT. Softwood lumber consumption increased every year since 2009, but remained 26.4% below the 2005 consumption high of 64.2 BBFT. U.S. softwood lumber production is forecasted to increase 5.0% to 35.6 billion board feet in 2018. The South drives this growth with production expected to rise 6.4% for the year, reaching 19.5 BBFT. This would be a new high for the region, surpassing the 19.0 BBFT of production in 2005. In the Base Case, the South’s share of national lumber production increases 0.8% to 55% in 2018.

The American government is imposing more anti-dumping duties on Canadian newsprint.

The U.S. Department of Commerce says a preliminary investigation has found Canadian exporters underpriced uncoated groundwood paper by between 0 and 22.16 per cent.

Uncoated groundwood paper includes newsprint, as well as paper for book publishing, printing and writing.

The department says it calculated a dumping rate of 22.16 per cent for Catalyst Paper Corp. of British Columbia.

It says Resolute Forest Products and White Birch were both found to have dumping rates of 0 per cent.

The department says it's instructing U.S. Customs and Border Protection to collect cash deposits from Canadian newsprint importers based on the findings.

The department's investigation into the alleged dumping began in August 2017, and an International Trade Commission investigation began the following month.

The department says it will make its final determination in the investigation in August.

This is the second round of U.S. antidumping duties on Canadian newsprint this year.

In January, the U.S. Department of Commerce slapped an overall tariff of 6.53 per cent on about 25 Canadian plants, mostly in Quebec and Ontario, following an investigation that began in August 2017.

Southern Oregon log prices broke last month’s 25-year record. Stud lumber prices adjusted upward this month, but mills are way below capacity due to shortages of logs and labor. Mortgage rates are up. Recent trends of lumber, logs, home construction, and housing markets, are compared in this month’s timber report.

Interpretation and Looking Ahead

The price of Lumber has jumped into near-record territory at $410 in response to recent log price increases. Still, studs as reported here lag behind many other solid wood lumber products. Random Lengths Composite Framing Lumber price is $509 this week. Random Lengths also reports that pine lumber from the South is spreading its reach into markets traditionally held by the Midwest and West. This is happening because of the near-record prices and supply shortages for many fir products. One local mill in Roseburg cut back to one shift a month ago due to a shortage of logs.

Log prices also continue to rise dramatically, in near-term record territory. For comparison, the January 2017 price of $720 is a more typical high price. Today’s nearly all-time record log and lumber prices, as reported last month, are also still cheap on an inflation-adjusted basis compared to the high prices of the 1990s. Inflation-adjusted to the ’90s prices, the log price today would be $1,522. Logs and lumber, at $892 and $410, are bargains.

Housing starts and building permits are also rising; they are more consistently in the 1300’s than recent years. There is considerable pent up demand for more housing, so this trend will likely continue if mortgage rates do not get too high.

The weekly price of mortgages has also continued to rise again this month, reaching 4.40 percent this week, a number not seen since April 2014, and 4.03 percent for the month. Taking a very broad look, mortgage rates have been on a gradual downward trend from a high in 1981 of 18.53 percent to a low of 3.31 percent in 2012. Since 2012, rates have fluctuated between 3.4 and 4.6 percent. Based on the changes in the cost of money and fundamental interest rates, sub-4-percent mortgage interest rates on 30-year fixed rate loans could be history, at least for the near future.

Each year in February, I choose a couple of prior years to compare to the prices of recent months. This year, the two choices are 2005, a traditionally good year, and 2009, which was deep into the Great Recession. In January 2009, studs hit their lowest price for the recession at $137/MBF, and unsold inventory of homes hit its highest level of 19.2 months. In January 2005, housing starts and building permits were over 2 million units — numbers which are unheard of today, and not expected to return any time soon.

Near-term high prices on both the log and lumber side, combined with technology, and despite the reduced volume of production, still create a strong wood products business climate. But the climate could be even better with more supply of wood. Western Oregon’s federal forest lands are under-managed, and the impacts of wildfire are devastating in the woods. It is a shame that more federal timber is not being thinned to mimic and ease the role of fire of our “dry forests” of southwest Oregon, where fire played a significant historical role. This lack of harvest contributes to a log shortage in Oregon. The causes, as previously discussed, are both log supply and labor shortages, long term problems which beg for long term solutions.

A new rail spur is now handling inbound freight in North Bend thanks to the collaborative efforts of a tribal entity, a public agency and a private business.

"This is really the perfect symbiotic relationship," said Ray Doering, director of communications for the Coquille Economic Development Corporation.

He said timber producers would rather use the spur to ship their inventory to the K2 terminal, said Doering. Otherwise they'd have tro truck everything to the port in Longview, Washington."

The Coquille Economic Development Corporation (CEDCO) and the Oregon International Port of Coos Bay announced the completion of a rail spur Wednesday to the K2 Exports yard on CEDCO’s Ko-Kwel Wharf property. The spur allows K2 Exports to bring logs by rail directly to its export terminal on the wharf.

“CEDCO has been interested in linking our industrial development property to the rail line ever since rail service returned to our communities,” said CEDCO CEO Judy Duffy-Metcalf. “After receiving a request to create a rail link and analytics to support the project from their customer, K2 Exports presented us with a business case for building a spur on the wharf property. We were happy to coordinate the effort with Coos Bay Rail Link.”

CEDCO estimates that it took 1,250 truckloads of logs to fill the Ken Hope, the most recent ship to depart from Ko-Kwel Terminal. It would take only 350 rail cars to handle that same volume of logs. This efficiency makes it more cost effective for logging operations in the Willamette Valley to export logs through K2 Exports and the Port of Coos Bay while also avoiding the need to add considerable truck traffic on roads leading to the coast.

K2 Exports reports seven carloads of logs arrived on the day the rail spur opened, and another seven cars arrived two days later. These were all shipped from Eugene by a company that has been looking to enter the export market.

According to Patrick Kerr, director of rail operations for the Port, establishing a rail spur to bring inbound forest products from the Willamette Valley is an important step toward opening more export opportunities for inland businesses.

“The Coos Bay rail line traditionally has served to export forest products from Southwestern Oregon to inland markets across the United States through its connection to the National Rail Network in Eugene,” said Kerr. “The new spur at K2 will create a new opportunity to bring forest products from the Willamette Valley into the Port for export to foreign markets.”

With the rail spur in full operation, K2 Exports expects to increase its number of vessel to nearly double the calls it previously accommodated in the Coos Bay Harbor.