Quercus’s latest Italy trip

“We met with suppliers to ensure a steady supply of quality timber – but challenges were clear”

One of the perks of having foreign suppliers is getting to travel to beautiful countries like Italy. Wayne recently made such a trip, and although Quercus is pleased to say that it continues to have access to beautiful, high quality, European timber, challenges to the supply chain were clear.

The vast majority of European Oak comes from Croatia and is then processed by Italian mills. However, the Croatian government is making logs much harder to come by, which obviously has a knock-on effect on the supply of finished timber available to merchants like Quercus. This is an intentional effort from the Croatian government to push up the price of their natural export – and a very understandable one, given the current economic backdrop in Europe.

Croatia also has other ways to squeeze value out of the timber trade. It has incentivised Italian mills to invest in Croatian infrastructure, which means kilning, cutting, grading, etc., in Croatia itself and employing Croatian workers to do it. The pay off for Italian mills is simple: the more effort they make to share value with Croatia, the larger a supply of high-quality timber they are guaranteed. Again, this is an understandable move, and one which seems to make sense for everyone involved. Although the multiplication of stake holders is also a multiplication of potential economic pain points.

A good example of this last fact is the cost of electricity in Italy. While Croatia has to make sure it is covering its own back economically, Italy must do the same. Given that electricity prices have risen by a factor of four in Italy this year, and that kilning requires having the electric on 24 hours a day, 7 days a week, 365 days a year, it is easy to see how this production cost is also factored in to higher prices of finished product.

Croatian policies and Italian energy are two of the most obvious input costs that have pushed the price of European Oak up 40% over the past couple of years, but they are far from the only ones. Additional factors include labour shortages, the increased paperwork and due diligence resulting from Brexit, and the background effect of seriously elevated inflation around the world.

The good news is that our main supplier in Italy makes significant investment into Croatia, and as a result is guaranteed 50,000 m3 of Oak per year. They’re down 5,000 m3 for this year so far, but working hard to get the last part of their yearly allocation. In other words, Quercus’s supply of European Oak is as safe as it is possible to be in the current climate.

Another piece of good news is that things look like they are finally getting easier. On our last trip, we had a strong commitment from our supplier that prices will remain firm until the middle of next year and not increase beforehand. And if our prices don’t increase, then nor do yours.

If you are looking for top quality European Oak for your latest project, or would like to discuss an alternative timber, please call Quercus on 0845 50 50 311. Our friendly and professional team will be happy to offer you the benefit of their experience.