Jane Marsh, Editor-in-Chief of Environment.co, explains how Canadian wildfires could impact construction suppliers.
Over the past few weeks, unprecedented wildfires have raged across Canadian forests. As these fires continue, construction suppliers across the globe face an uncertain future.
Canada is a leading supplier of lumber, and its current situation may be an analogue for what could happen to other forestry sectors in the future.
Material suppliers and others in the construction supply chain must pay attention to the situation. Adapting to emerging challenges is crucial in averting near-term losses.
Furthermore, lessons learned now can help address similar obstacles in the future as climate change threatens more material sources.
The most direct impact of the wildfire season on the industry is a drop in lumber availability. Canada is the second-largest softwood lumber supplier and has the world’s third-largest forest area. Wildfires have already caused many Canadian sawmills to temporarily shut down, leaving many construction companies without their primary source of wood.
For nations like the UK — which imports 80% of its timber — supply shortages like this have far-reaching consequences. Construction firms can restructure supply chains and find new sources, but these adjustments take time. Many will likely have to delay projects or find alternate building materials to replace hard-to-acquire wood.
In the near-term, construction supply chains can focus on lumber alternatives and purchasing from different mills or third-party distributors.
To mitigate similar shortages in the future, organisations should prioritise distributed sourcing and favour alternative building materials less prone to climate change-related disruption.
As lumber availability shrinks, construction suppliers must also grapple with higher costs. The law of supply and demand has already driven timber prices higher amid Canadian wildfires, and restructuring supply chains often incur high costs, too. Amid these price hikes, supply chain organisations face the difficult decision of either accepting lower profit margins or raising prices to transfer costs to their clients.
Recovery from wildfires can be slow, too. Governments often restrict how much lumber sawmills can harvest after a fire to allow the forest to regrow. Consequently, supplies may remain constrained for some time, driving higher prices in light of consistent demand with less supply.
Thankfully, construction suppliers and their partners can account for these financial issues through several strategies. Many local and national governments also offer rebate and incentive programs for energy-efficient buildings, which can offset higher material costs.
Alternative materials — especially recycled wood — can also provide lower-cost resources and reduce dependency on more volatile supplies.
Supply chain delays
Construction suppliers must also prepare for delays. Canadian lumber suppliers will be unusually busy over the coming weeks and months and will likely face growing backlogs amid dwindling supplies. Similar delays could stem from sawmills outside of Canada, too, if enough firms turn to these other sources, overwhelming them with demand.
The Canadian wildfires and resulting smoke may cause transportation delays. These delays will play into lumber’s rising prices and will delay returns on any shipments that do go through, so construction companies must be ready for disruption.
In the near term, supply chain organisations must inform their downstream partners about the likelihood of these delays to manage expectations and give them time to adapt. Reshoring and near-shoring lumber production may be necessary to prevent similar delays in the future. UK-grown timber has risen in recent years, making that more viable.
The need for change
As climate change worsens, supply chain disruptions like the current Canadian wildfires will become more likely. In light of that threat, suppliers must learn to adapt to them now. Short-term fixes like adjusting prices and managing expectations are important, but the industry must also consider long-term adaptation.
Supply chain restructuring and switching to new materials will become increasingly essential. These changes take time and incur some disruption of their own, but they’ll minimise the effects of climate change-induced shortages in the future. Embracing the change now will result in more savings tomorrow.