Why Do Log Prices Differ Between Eastern and Western Washington?

You can almost always make more money selling timber west of the Cascade crest — Take a look for yourself on the Washington DNR log price tracking site. West side Douglas-fir #2 saw prices are regularly 50 percent higher than east side camp run sales, often more.  In fact, with the recent peak, coast market prices have been as much as 94 percent higher in 2018.

So why is there such a consistently large difference? The answer has everything to do with infrastructure and distance. If you look at what it takes to sell a log on the east side versus the west side, it’s easy to see why the eastern landowner is making less money at the end of a harvest.

timbersalesmap
This map shows the regional divide used by the Washington State Department of Natural Resources when determining average log prices.

First and foremost, there are simply fewer mills available to landowners east of the Cascades. More mills have set up shop on the west side, where timber yields are higher and there are more forested acres. What does this mean for east side landowners? Well, transportation is often the most expensive part of a logging operation. As a result, landowners in Eastern Washington incur greater costs when shipping logs from their forest to the closest mill, which can often be over 100 miles away.

On the west side, where there are more mills, transportation is equally as expensive but hauling distances are usually much shorter, ultimately putting more money in the landowner’s pocket. An analogous situation on the west side occurs when a landowner tries to sell oversized logs. Because only a few mills in the region are equipped to handle big logs, landowners incur greater costs to ship them and ultimately make less money.

dougfirprices
This line graph shows average Douglas fir prices from January to November 2018 in the coast and eastside marketing areas. (Washington State Department of Natural Resources)

Furthermore, when eastside mills try to tap into the more lucrative export markets on the coast, they’re severely disadvantaged. Selling logs to the export market requires mills to re-sort logs on arrival and set some aside until they have enough to ship over the mountains. The extra sorting and hauling costs dig into landowner profits and often makes it economically nonviable.

These costs occur on a spectrum, with landowners closer to the foot of the Cascades incurring lower shipping costs than their counterparts further east. As such, some in Central Washington may be able to get away with shipping to coastal markets and make a little more money but will still make less than a landowner on the coast. This applies to shipping via railways as well, with any logs shipped and sold on the west side having to be severely discounted at the purchasing end to remain viable.

In a nutshell, log prices are lower on the east side because there is greater cost incurred by loggers and mills to make the most of them. Because a mill’s first concern is keeping its doors open, the brunt of that cost has to be carried by the landowner.

Patrick Shults, Extension Forester, Washington State University, patrick.shults@wsu.edu