The Russian forestry sector can be divided into two distinct fragments – one, the large export-oriented companies and two, smaller companies that rely on the domestic market. The industry, however, is going through a serious pressure period that has ultimately amounted to the high prices of the delivered logs, along with the requirement to invest in new equipment and infrastructure to maintain competitiveness. 


What Does the Russian Sawmilling Sector Look Like at a Glance?

If we look at the past, the production of Russian sawn-wood has almost doubled since the early 2000s. The industry development and overall level of production are typically driven by exports. However, the domestic demand and production for sawn softwood are expected to be higher than what the official statistics indicate. 


Now, the Russian sawmilling industry is still extremely fragmented as it is characterized by smaller mills with an annual capacity of hardly 100,000 cubic meters. Most of these mills (small and medium-sized ones) focus on serving the domestic market and local clients. This means that a large share of these mills will be missing from the production statistics, officially resulting in a misleading supply and demand scale in the country. However, there is still a chunk of sawmills (the larger ones) focused only on the export markets. 


The 1H 2021 railway timber transportation experienced unexpected growth due to the increase in the demand for pulp, timber, and paper products for both domestic and external markets. The total volume of sawn timber and timber loading, including the transportation container, has increased by around 3% in the specified period of around 22.6m tons every year. 


The driver for the growth in domestic traffic, at around 6% to 10.6m tons, accounted for the unprocessed wood transportation for the Russian processing company requirements. Around 10.2m tons were transported, with 7% year-on-year and that included +4% to 2.9m tons of sawlogs, +24% to 2m tons of veneer, and +42% to 1.4m tons of timber for the production of wood-based panels.


China, in the meanwhile, has become the primary export destination for Russian sawn-wood. The exports from Russian sawmills to Central Asia have also increased, however, at a modest pace. The low-quality requirements of these markets have enabled the sawmills to meet the demand without changing anything. 

The investment in market and product research, along with expanded marketing and sales efforts, is sure to drive the Russian sawmilling industry to its maximum value potential by increasing profitability and production. Timber Exchange is a cloud-based supply chain management system created to automate export, import and logistics processes with smart tools covering all steps from inquiry until cargo arrives at the Port of Destination, saving significant time and resources for the business.