The wooden pallet market under pressure !
The wooden pallet market under pressure
Just one year ago, at the beginning of the Covid-19 pandemic, the French organisations in the wood packaging sector (SYPAL and FNB) were already warning of the risk of shortages and a surge in pallet prices
In recent weeks, just like for other construction materials (steel, copper, PVC…), the wood industry has been under great pressure. The disruption of supply chains linked to the sanitary context is mainly to blame, but many other factors influence the pallet market.
Covid-19, North American demand pressure and Brexit
First of all, the prolongation of the pandemic disrupted the production and the logistical chains of building materials at the international scale. All the manufacturing plants that were shut down were only able to restart at the beginning of the year.
At the same time, the upturn in the US and China is putting pressure on the demand for building materials. Timber from Scandinavian, German and Baltic countries is exported to the United States, where the market is more profitable. Currently, the unit price of a pallet in the US is close to $15, while the usual price is between $9 and $12 (source : Bloomberg)
On the other side, the Brexit and the new regulations that governing trade between the UK and the EU, have had an additional impact on the market. Especially since January 2021, where the demand for Europe pallets is steadily increasing, due to their compliance with ISPM-15 standards required by the new legislation.
15% price increase and extended deadlines
Essential for the transport of goods, and in such a period where e-commerce is booming, pallets are more and more required by logistics platforms and warehouses. At the same time, the prices of wood, nails and labour are rising.
The gap between supply and demand has a direct impact on the prices and the manufacturing times of pallets. According to the FEFPEB, between February 2020 and February 2021, the price of the EPAL pallet has already increased by more than 15%, and it’s not over yet!
Meanwhile, delivery times could reach up to 8 weeks for new pallets (source : emballagedigest.fr). This has not happened in the last 20 years!
A Return to Normal? Not for a couple of months
A return to balance is not expected soon … and it may take several months more.
For the moment, in France, the national market is prioritized, thanks to the good inter-professional cooperation between manufacturers, reconditioners, rental companies, etc. In particular the sawmills which have been actively working to increase their production rates and run at 110% of their capacity. However, to face this situation and the longer delivery times,
the FNB* advises logistics professionals to anticipate “as of now their orders, starting from those necessary for the summer period“.
What are the solutions?
In addition to anticipating orders for new pallets, which is recommended by the federation and the organisations of the wood industry, other alternatives can be envisaged.
Purchase of repaired pallets can be a solution to keep costs down. However, if the situation persists, the price of recycled pallets could also increase. Even though they will always be more cost-effective than new supports.
Finally, the reuse of pallets in circulation is an excellent way to keep your budget under control. And it is also an opportunity to reduce your environmental footprint! By reusing and relocating pallets, you optimise their rotation rate and extend their life cycle. This means savings on wood resources and a reduction in your CO2 emissions. Digital platforms are an excellent way to get a better visibility on your pallet pools, and to detect risks as early as possible.
Digital platforms are an excellent way to get a better visibility on your pallet pools, and to detect risks as early as possible.
Faced with this crisis, our digital platform can help you to efficiently track your pallets and optimize the management of your pool: no purchase of new or unnecessary pallets, no stock shortages, a budget under control and a positive impact on your environmental footprint.
Opalean is an efficient and quick solution to implement, do not hesitate to contact us!