As well as market volatility and fluctuations in demand, which can be caused by external factors, the forestry industry in Canada faces several challenges, including:

• Competition from other global exporters.
• Changing import requirements and compliance with international trade regulations.
• Sustainability and environmental concerns.
• Environmental damage due to wildfires and beetle outbreaks causing a large loss of forest areas (B.C. timber industry in throes of change, as premier warns of ‘exhausted forests’-The Canadian Press, Owen,2022).
• The impact of climate change causing shifts in tree phenology (including earlier spring arrival, longer summers, and altered timing of dormancy) (Natural Resources Canada, 2022).
• Reduction of the annual allowable cut (B.C. forest industry looks to get out of the woods amid meetings with government leaders- Terrace Standard, Depner, 2023).
• Labour shortages (Retirements Add to Forestry Labour Woes - Wood Business, 2023).
  
  

The forestry export industry has also been impacted by congestion across supply chains, due to their reliance on rail transportation to bring products to either the US or locally to Vancouver for export to global markets.

Despite the challenges, in recent years, our experts at MSC have noted some key changes in the forestry export market. Traditionally, Canadian forestry products have found strong markets in the United States and Western Europe, however, this has recently been broadened.

Due to their incredible reputation for high-quality wood fibre products, Canada has been able to expand their export markets into several other countries, including China.

Notably, within the Chinese markets, there has been a remarkable change in lumber exports shifting from low grade timber to higher value products. This is partly due to the collaboration between forest product associations, provincial agencies, and the Canada Wood Export Program which worked towards increasing Chinese demand for higher-grade lumber. Since 2000, there has also been a notable increase in China's demand for Canadian pulp, which now makes up 34% of Canada’s pulp exports.

Similarly, Japanese consumption of high-value wood products and structural lumber for housing purposes makes them an important market for Canadian forestry exports. However, this demand has waned slightly in recent years due to economic conditions and a lack of population growth.

While Canada has been actively seeking new export markets, the United States remains the most significant market. The country’s housing construction market has continued to be a vital source of demand for the forest sector, and this is not expected to change anytime soon.

One of the keys to overcoming the challenges faced by the forestry industry is modernisation. Governing bodies are currently developing a new 10-year framework for forest landscape plans, to transition from a high-volume to a high-value forestry sector. This will be done by reducing the export of raw logs and promoting locally manufactured wood products. There is also a pilot project underway, where pulp mill by-products are being used in asphalt to reduce waste still further. (B.C. timber industry in throes of change, as premier warns of ‘exhausted forests’-The Canadian Press, Owen,2022).

The Canadian Forest Service is also researching the impact of climate change on Canada’s forests, which will help develop sustainable forest policies and management approaches. In some areas, remote sensors are being used to monitor how forests respond to climate variation. This effort to increase understanding is crucial to ensuring the future of the forestry sector.