While mill closures have been reality for the lumber sector for decades, the big problem is that the rate of failure has reached alarming proportions. This is particularly true in the hardwood sector. According to the Hardwood Federation, the advocacy group for the U.S. hardwood sector, it estimates that at least one sawmill is going out of business every week.
Late last year, Dallin Brooks, NHLA executive director noted, “During the 2017 trade dispute, the hardwood industry experienced significant difficulties, including a 20–25% export decline…Several companies were forced to shut down, and many others struggled to recover. This year is worse.”
The Hardwood Federations said American hardwood exporters lost half of their market share in China when countries retaliated against President Trump’s first round of tariff policies in 2018. The fear is this time reprisals could force many more mills to close that are facing hardship due to domestic demand reductions.
Big box stores have decided to offer more alternatives. And changes in consumer preferences toward vinyl, plastic flooring and other alternatives had really hurt the U.S. market. As more and more hardwood demand collapses, even more mills close their doors. As a result, hardwood availability continues to see tightening.
A contact in the Central South area shared, “We are getting a lot of calls from mills looking to move lumber. Many small mills have just dropped out or gone out of business. The small guys cannot survive another poor economic year, and the larger players are operating at negative or reduced margins.”
Increasingly hardwood pallet producers have told the research team for the Pallet Profile that they believe 2026 could be the turning point, good or bad, for the hardwood industry. And so far, all indications are that this will be another very tough year for the domestic hardwood sector. Demand for hardwood, whether it be grade or pallet material, remains off. More mills are sitting on logs with no demand for processing them. Various contacts from hardwood regions continue to report mill and pallet shop closures.
A sawmill owner/pallet producer in the North commented, “Mills have over-supplied the demand causing a lot of grade mills to become obsolete. No one wants real wood in anymore. Everyone wants the new fake cheap stuff. Sure, they’ll still need pallets to ship that stuff on, but that won’t keep mills or pallet guys in business.”
Hardwood mills providing crossties will also face challenges as orders will slow as the result of the proposed merger between Union Pacific and Norfolk Southern railroads. Usually railroad mergers result in lower total tie purchases as rail networks are rationalized over time and planned improvements are delayed for further analysis by the new ownership.
The situation isn’t great for the softwood sector either. Ongoing curtailments in both Canadian and U.S. more are seeking to reorient the market around depressed demand.
Looking at the entire picture, Forisk Consulting compiles data on mill activity in regard to openings and closures, it recently stated that industry closures outpaced openings in late 2025 and early 2026. Some of the notable U.S. closures include: IndusTREE’s sawmill in Alexander City, AL; Mackeys Ferry Sawmill in Roper, NC; West Fraser in Augusta, GA; and Domtar in Glenwood, AR. Harrigan Lumber in Monroeville, AL and Interfor in Dequincy, LA also reduced production in late 2025.
And a related concern, especially when it comes to wood waste, is the closure of pulp mills as the paper industry continues to retract significantly. Pulp mills face pressure from dwindling paper markets, poor pulp pricing and a lack of affordable fiber.
What can pallet companies do? Some have developed their own sawing capacity or at least resaw capacity. Some have worked to improve relationships with pallet lumber producers. If you want to find new suppliers, look at the Lumber Pages inserted in this issue or check it out online at https://palletenterprise.com/maplumberpages/.
It always pays to stay on top of the latest lumber market developments. Check out a sample issue of the Pallet Profile, the weekly low-grade lumber market report for pallet professionals. You can find out more at www.palletprofile.com or contact Rick Henretty at rick@palletprofile.com. The most important step is to have a plan and to develop an extensive supply network based on material in your area as well as imports, particularly for those located near a port.
Better lumber security starts with relationships and knowing who can supply you the quality and type of material that you need on an ongoing basis.
