Gross and Janes Co.
Spring 2014
Message from the President and CEO

Stabilizing the Hardwood Tie Log Supply — Is There a Solution?

Hardwood sawmills have been increasingly burdened with a shortage of available hardwood timber for railroad ties as our nation’s improving economy leads to increased demand for hardwood lumber in the housing market and for board road/crane mat in the drilling industry. In many areas wet weather continues to make logging difficult so even the potential supply of logs is constrained.

A variety of factors are driving sawmills to merchandise their output to higher yielding and higher profit markets. With little or no grade requirements, crane mats deliver a higher profit margin to the sawmills simply by allowing greater yield (less off-grade/degrade material from low grade logs). In the lumber arena, pricing is outpacing tie prices by significant margins. In yet other areas at this time of year, hardwood pulpwood is also in high demand, driving stumpage prices higher according to reports.

Sawmills have thus been forced into paying higher prices to the landowners and loggers for timber supply. In 2013, the price of southern hardwood timber (#2 Red Oak) rose the equivalent of $2.45 per crosstie between August 31 and December 6. At the same time, some crane mat producers in East Texas were buying the same logs that produce crossties for $75 per ton, nearly a 33 percent premium.

The impact to crosstie suppliers and the Class 1 railroads continues to be less crossties coming to market. Nothing in the current outlook, from knowledgeable market watchers, would indicate anything is about to change this dynamic.

Landowners, loggers, sawmills, crosstie suppliers and Class 1 railroads are in this together — for those who want to procure crossties, the tail is wagging the dog. Landowners are in the midst of a rare sellers market; sawmills too, but weather and other factors have conspired to limit the amount of raw material available to saw.

Mike Pourney


Marketplace Report — First Quarter 2014
A random survey of selected sawmills was taken the week of February 17, 2014 to develop this non-scientific snapshot of the crosstie purchasing market. This report is broken down into four primary log harvesting regions covering portions of Missouri, Arkansas, Texas, Louisiana and Mississippi (see map). It covers both oak and mixed wood logs.

Highlights: Sawmills are reporting generally poor inventories of logs throughout the region, down from ‘poor to fair’ in most parts of the region the previous quarter. Some sawmills are reporting no log banks at all. Wet weather and seasonal mud are to blame for most of the inventory problems. Log prices are showing slight increases in most areas of the region, although prices in southern Arkansas held steady while log availability plunged.

Map and Chart
Gross & Janes Co. Railroad Cross Ties | 157 W Argonne Drive | St. Louis, MO 63122
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