The sharp drop in Russian timber product exports following the imposition of EU sanctions is not surprising to all parties in the market. But up to now, while Russian domestic timber companies are still unable to cope with new challenges, the domestic market situation is not optimistic either.
Looking at the volume of domestic railway traffic in Russia alone, between January and September 2022, rail container traffic increased by 0.5% year-on-year, with a total of 4.8 million TEUs transported in the first nine months. Meanwhile, shipments of wood and wood products fell 1.7% to 445,600 TEUs.
The Russian timber market is still struggling to adapt to foreign trade and financial restrictions. So far, a considerable number of woodworking companies still have not found new suppliers and solutions to their logistics problems. According to statistics from relevant agencies, the average capacity utilization rate of Russian timber companies in October 2022 was only 30-40%.
In fact, most Russian timber companies are currently on the verge of losing money. Exporters, on the other hand, want substantial transport subsidies to ultimately maintain minimal production profitability.