Gabon, the country famous for supplying Okoumé face veneer to Indian plywood mills, is reportedly facing many hiccups related to logistics and transport matters. ‘The Okoume timber supply at affordable price at the time of rising dollar against Indian rupee is posing tough time at present. Amidst these problems ‘high competition for selling face veneers due to weak demand within Indian plywood manufacturers’ due to continued pouring of face veneer from Indonesia, Myanmar, China and Local sourcing within India etc is presently putting Gabon
based veneer manufacturers in a tight spot.
As per reports, presently Gabon can export 300 to 350 containers of face veneer per month to Indian market but the struggle to find containers has increased during last two months. Many units are reported to have no space left for storage of face veneer crates. On the contrary, Indian plywood industries and trade buyers are waiting for material against their order booked 2 to 3 months ago. According to reports, around 350 containers are stuck at the Liberville port because of lack of vessels. Last month few scheduled vessels were all of sudden
cancelled, has caused material jamming at Gabon. The availability of cargo vessels and containers is said to be a regular and key reason behind the stuck-up materials informed producers based in Nkok.
“It is no easy walk for financial weak players” expressed a face veneer manufacturer operating in Gabon. There are many other manufacturers based in Gabon, expressed to The Ply Reporter that ‘there are challenges due to lack of banking support in Gabon.’ Added to that ‘the local logistic scenario, lack of availability of vessels and long shipping time to key buying countries is making our profit calculation at risk where we have bought costly land and established plants” express a few producers during month of August this year. Speaking on condition of anonymity, a face veneer producer said that ‘the need of huge capitals or can say a far longer than anticipated rotation of capital’ is the biggest pain point on which a small or mid-size player cannot sustain in long run’ without continued support of GSEZ.
The Ply Reporter contacted GSEZ office and received comments from Mr Nitin Misra on the issues. Replying on the issue to Raw material supply, he said that ‘Quality and quantity of Okoume logs and timber have no issues so far.’ Those manufacturers whose credit with GSEZ log supply has gone beyond INR 1 CR have been blocked for further log supplies without payments. They have been asked to pay first and then take the log supply and has nothing to do regarding timber availability. Replying on Material Jamming, Mr Nitin replied that ‘Jamming of finished face veneer material or other finished goods is an issue’ and is duly acknowledged by authorities at GSEZ. This is because of the dredging at Port as a part of routine annual maintenance. The cancellation of vessels berthing has led to stuck up
We are limiting number of companies, but they are free to have internal expansion. Our objective is to generate employment and increase FDI in the country and boost the economy. How can we get value addition, whether it is done by one company by expanding their infrastructure by 10 times or by 10 companies, doesn’t matter? But, our objective is to facilitate the existing players better rather to bring new players and increase unnecessary competition.
~Mr Jasveer, New Veneer
Production Units
materials of many companies who are now hand to mouth for money and raw material supply rotation. On material price issue Mr Nitin informed that ‘the material prices have said to be increased because of rising oil prices. According to GSEZ authorities and Gabon based veneer producers, log prices have increased by around 7 USD per cbm due to rise in fuel and transportation cost.’ Since the raw materials are not in demand as earlier due to no dispatches at the port, log prices have in fact stabilized. The quality of logs are as good as it uses to be earlier informed Mr Nitin from GSEZ.
It is to be noted that, Gabonese Republic in partnership with Olam International Limited, Singapore developed a Special Economic Zone, spread over 1126 ha at Nkok (20 Km from the capital city of Libreville). The Special Economic Zone at Nkok is managed and operated by Gabon Special Economic Zone (GSEZ) SA which offers land on freehold and lease basis for timber processing industries along with utilities like water, electricity etc.
As part of its business facilitation role and to ensure unhindered supply of logs to units in Nkok SEZ, GSEZ SA is also operating a log supply chain for units in SEZ, and offer long term contract for assured supply of raw material i.e. logs.
Gabon is rich in Okoume logs that are obtained through sustainable forestry but with arrival of more and more face veneer and plywood plants, keeping a control on quality of raw materials and its prices, will not be an easy play for all the manufacturers present there. There are 28 factories being operated by Indians producers, who have invested in Gabon wood manufacturing sector for face veneering apart from others in furniture and ply.
There are many who are in line to get the land allocated but GABON SEZ has put a 1 year ban on ‘new face veneer units’ in wood sector in Gabon.
THE CHALLENGES AT GABON
1. Logistics is a major issue, which is affecting the export volume and service.
2. Shortage of technical men power is halting the production process.
3. Need finance support as raw material to finished goods sales time duration is roughly 5 months thus not easy for small players.
4. Cutting and transportation of timber from forest is a herculean task, hence timber industries are mainly depend on some selected loggers.