The global economy has been under tremendous pressure since the start of the COVID-19 pandemic and the war in Ukraine. These two crises have forced companies to find ways to be prepared for geopolitical tensions and supply chain disruptions.
The timber market dynamics have been turbulent the past few years due to supply and demand shocks. The ongoing war in Ukraine will reshape the wood supply from Russia and Belarus to Europe and the descending economic iron wall may prepare ground for new major disruptions.
The war in Ukraine inflicted an economic shock and upheavals on the forest industry value chain. The biggest impact on European factories and competitiveness takes place via rising energy prices. This concerns especially large mills running on Russian gas. New, energy-efficient lines strengthen their position in the cost competitiveness curve, increasing the gap to competing mills. CO2 emissions permits, chemicals and freight will become more expensive and weaken Europe's global competitiveness.
The pandemic revealed how damaging it can be if global supply chains focus solely on efficiency. Changing an existing supply chain is not simple, as it has to be sustainable and secure, and it still needs to balance the demands for cost efficiency.