Lumber cost decreases offset by operating cost gains

A drop in the price of wood has helped lumber shops improve their business, but consumers are still facing high operating costs.

The Canadian lumber industry saw enormous price spikes during the pandemic years of 2020-2022, with costs close to triple what they are today for some products.

Prices peaked in 2021 at $2,000 CAD per thousand board feet,while today that sits at $700, a 65 per cent drop.

“We saw prices skyrocket during COVID, but so too did the cost to operate,” said Aspen Dudzic, the Alberta Forest Products Assocation’s communications director. “And interestingly, post-COVID, we saw the market prices for lumber go down, but the costs to operate have not come down in the same way.”

One small business owner says costs are slowly levelling off.

“(I’m seeing) prices slowly creeping up, just the lumber prices, the input costs on those, and the fuel costs have been going up. So we’re seeing all of that kind of creeping up every year. It’s leveling out now, we’re seeing generally this year to next year, fewer increases,” said Mat Bouma, who owns Bramari Saunas.

Prices vary from year to year

Some lumber shop employees say lumber prices year over year vary, although they certainly are nowhere near the astronomical highs that were reached in 2021 and 2022.

“We have noticed a decrease (in cost) in pressure treated for sure. Cedar has gone up a little bit, more of the specialty items roughly increased 10 to 15 per cent,” said the Cedar Shop’s sales manager Alex Palko.

Even though lumber costs have seen a huge drop in prices in a vacuum, why haven’t these cost savings been passed on to the consumer?

Dudzic says it comes down to a variety of factors relating to the global market and operating costs.

“The supply chain is really complex,” Dudzic said. “Nothing we do operates in a vacuum, so there’s a lot of other compounding costs that we have to look at, like inflationary pressures, upticks in fuel and energy prices.

“Fuel is something I think all of us can really see the impact of, especially given the ongoing war (in Iran) right now,” she added. “Transportation challenges are a really big one,

“There’s a lot of costs that are accumulated just getting the product from the mill where it’s produced to then the customer afterwards,” she continued.

Trade war

Top of mind is the ongoing trade war with the U.S, where cumulative trade barriers have added significant stressors.

“(Right now) the price is $700 per 1,000 board feet, but we also know that producers aren’t going to see a return on about 45 per cent of that,” Dudzic said. “The combined softwood lumber trade barrier to the U.S. right now is sitting at about 35 per cent, and that’s in addition to the Section 232 tariffs, which are applied to lumber, are 10 per cent. So that puts us at a 45 per cent trade barrier to the U.S.”

However, even when facing these challenges and steady price increases for some products, the Cedar Shop says business has been steadily picking up year over year since the pandemic, noting stability has led to more consumer confidence.

“We’ve just gone up and up and up and up. For the trends we see less foot traffic, more phone-in orders from contractors,” Palko said.

“It helps with predictability, just forecasting into the future a little bit. […] I think generally if we give an estimate out, we can’t sit on that for too long. 30 days is the most we could sit on it before, and then we would have to re-quote it again, whereas now we’re starting to be able to hold some of those quotes, so we can hold an estimate out to 60 days or maybe even 90 here in the next few months hopefully,” Bouma added, speaking on stability for both him and his customers.

Even with operating cost challenges, Bouma, alongside other contractors, say 2026 so far has been a great year for work, saying it’s been a consistently busy year as costs appear to be steadying amid multiple challenges.