Over the past few weeks, diesel prices in Finland have risen so sharply that timber haulage is effectively being carried out at a loss. Forest sector companies want to reduce the volumes of timber they buy in, so they need to get the roundwood out of the forests, but the weather has unexpectedly turned warmer and a prolonged thaw will most likely cut roundwood haulage considerably.

The steep rise in diesel prices is also affecting timber hauliers. The war in the Persian Gulf region has caused a sharp increase in prices. “Yesterday a litre cost 2.168 euros. It has gone up by 30 cents in a short space of time. At the end of last year a litre of diesel cost one and a half euros,” Kari Palojervi, head of the forest sector at SKAL, told the newspaper “Metsälehti” in mid-March. SKAL represents companies that haul roundwood, wood chips, wood pellets and peat. According to Palojervi, a 30-cent increase in the price per litre of diesel corresponds to a rise of roughly 10% in total costs. Since haulage companies typically make a profit of 3-5% a year, haulage is currently running at a loss.

The price of fuel accounts for a little under a third of timber haulage costs. A rise in the price of diesel is bound to affect the profitability of haulage companies. On 29 March, the price of diesel in Finland reached 2.32 EUR per litre in places.

Almost all companies hauling unprocessed timber have a fuel clause or an index-linked procedure for reviewing haulage prices written into their contracts. Palojervi points out: “The problem lies in the fact that the price of fuel rises every day, whereas haulage prices are usually reviewed once a month or less often.” Since the thaw set in suddenly in Finland this year and looks set to last a long time, the volume of roundwood haulage has fallen sharply. “Economically it may even be better not to haul the timber at all, but simply to wait and see how long the situation lasts,” Kari Palojervi stresses.

Roundwood has to be got out of the forest, however difficult that may be

This spring, the cold gave way abruptly to warm weather across much of Finland. Even at night it is no longer as cold as it usually is in early spring. Moving timber lorries around has become problematic, particularly on the private roads along which timber loads most often have to be hauled out.

“The situation is difficult both for logging contractors and for us, the haulage companies, and of course for our customers as well,” Palojervi notes.

Because the financial situation of Finland's forest sector companies is unstable, they have reduced their timber stocks. They are now trying every possible means of getting previously purchased volumes of timber out of the forest. “Timber loads are being hauled out at the risk of damaging the roads. Gravel then has to be brought in to carry out road repairs,” says Kari Palojervi. In the second half of March, problems on forest roads caused by melting snow were already evident in the Kuopio region of central Finland as well. “In the mornings we have managed to ‘rescue’ the roundwood landings, but in this area the damage to road surfaces has already proved far more serious than in the past two or three springs,” Palojervi stresses.

The weather forecast for the coming weeks gives no sign of anything positive for Finland: across most of the country air temperatures will stay above zero and night frosts will grow weaker. On the other hand, it is not warm enough for forest roads to start drying out properly. Over the past couple of weeks it has been warm even in northern Finland, so logging machinery can no longer reach the felling sites there either.