Weakening Orders Impact Southeast Asia Timber Trade

As we embarked on this year, the business outlook was promising. We experienced a surge in orders for imported materials from our Southeast Asian (SEA) clients and a robust demand for SEA-manufactured products for export. Although it didn’t quite match the pre-COVID-19 era, it was a significant improvement over 2023, instilling optimism for the year ahead. However, this positive momentum was short-lived. Several factors have contributed to a notable slowdown in business:

Rising Freight Costs: The cost of sea freight has surged dramatically, increasing by 5-6 times in recent weeks, with no signs of stabilizing.

EUDR Compliance Challenges: The new European Union Deforestation Regulation (EUDR) has introduced complexities. Buyers and suppliers globally, including those in Southeast Asia, are grappling with the compliance requirements, particularly the geolocation mandates.

High Interest Rates: Elevated interest rates worldwide have dampened consumer enthusiasm for purchasing homes, directly impacting the demand for timber.

Election Uncertainties: Several countries are holding elections this year, leading to delays in government policies that are crucial for encouraging new housing developments.

Looking ahead to 2024, our outlook remains cautious. These challenges show no immediate signs of abating, casting a shadow over future business prospects. We continue to monitor the situation closely and adapt our strategies to navigate these turbulent times.