Pallets: Wood price increase and pandemic

Aug 4, 2021

For many economic sectors including food and pharmaceuticals, pallets have always been a fundamental element in the storage and distribution process as they allow the transport and protection of goods at the destination.

In fact, the European Pallet Association asserts that “there is a smooth flow of goods in the logistics world with over 600 million EPAL Euro pallets used.”

Since the beginning of the pandemic in January 2021, has been shown, a continuous increase in the purchase prices of pallets due to continuous demand and lack of material causing a consequent increase in the cost of the woods and other raw materials (such as iron for iron nails) and a delay in the delivery of supplies. FEFPEB secretary-general, Fons Ceelaert, regarding this topic said: “On the one hand producers of wooden pallets and packaging need to satisfy their customers’ demands and growing volumes, but on the other, they are experiencing enormous price increases on the wood market. As wood costs account for more than 70% of the price of a wooden pallet then pallet price increases are unavoidable.”

Also, according to the United Fresh Produce Association “the shortage of lumber and wood products has increased the cost of raw lumber 200% to 350% and is making the cost of wood pallets increase incrementally.”

A static study carried out by the U.S. Bureau of Labor Statistics has shown the trend of the “Producer Price Index for Wood Pallets and Pallet Containers, Wood and Metal Combination”. As in the statistic graphic below it’s possible to see the increase since 2010. From the beginning of the pandemic event in 2020, the price has reached sky-high prices and this trend does not seem to stop in the short term.

The main causes of this increase are:

  • the high demand for wood in the construction market by North America and China.
  • A reduced supply of wood due to the measures to contain the pandemic also accompanied by adverse weather events.
  • The increase of the prices of other raw materials for the pallets as for example the nails because the demand of the market has expanded into new States.
  • The lack of trucks to transport pallets, in turn, increases the cost of the shipments.

Currently, the market of wood pallets is constantly changing because the wood price changes about every 15 days, and to deal with this situation it is very important a relationship between the suppliers and the customers to avoid a stock breakage of this product. Lo.Li. Pharma International is aware of the huge global issue of pallets, so is always in contact with their manufacturers to monitor the increase of the pallets price and their availability on the market in order to meet customer needs and avoid delays in delivery of goods.