We’ve been anticipating an affidavit to go on tariffing Canadian lumber coming into our country. A lot of people in this industry purchase kiln-dried softwood out of Canada to compete against our U.S. kiln-dried softwood. In the building industry, pallets are a major portion of this. A lot of our pharmaceutical customers require a dry pallet so we make their pallets out of kiln-dried softwood.
With Canada getting these tariffs, they raised their prices because they wanted to start banking some money because the tariff is retroactive for six months. That chased the U.S. buyers out of Canada and down into the U.S. which has created a supply and demand issue. There is a shortage on kiln-dried Southern Yellow Pine so the pricing has been going up and up and up for several months now.
The way John Rock, Inc. is responding is to proactively secure permits to break ground on putting our own drying kiln in our facility so we can kiln-dry manufactured wooden hardwood pallets. This will allow us to offer a dry pallet made out of hardwood. Hardwood pricing is cheaper than Southern Yellow Pine right now. Even with the cost of adding the kiln-dry, we’ll still be lower than the cost of softwood.
That’s how we are going to solve the problem of increased prices.
“Hey Mr. Customer. I’ve raised your price twice already and I need to raise it again.” The solution will now be “Let me offer you a kiln-dried pallet at a lower price. It has the moisture content you’re looking for. It’s a good solution and gets us away from the rising cost of softwood.”