For a few months now, at Grupo Raminatrans we have been observing that the demand for the platforms used to transport almost all consumer or industrial goods, pallets, is skyrocketing amid an increase, especially in electronic commerce. At the same time, the two keys to its production, cheap wood and cheap labor, are in short supply, and even nail costs are rising.
Pallet prices have hit record highs, according to an index by the US Department of Labor, and European indicators show big jumps from the UK to Germany. The market may continue to rise during peak construction season, spring and summer, and when Covid-19 vaccines help reactivate sectors that are still idle, adding to inflationary pressures running through supply chains.
Lack of pallets
The rising cost of wood has a direct disastrous consequence for the logistics industry. Why? Pallets. The shortage of wood for pallets has caused supply delays and, at the same time, is directly pushing the prices of EPAL pallets. The European Federation of Wooden Pallet and Packaging Manufacturers (FEFPEB) points out that the few supplies of wood in some international markets are expected to increase demand and prices. And they play a critical role in essential food, beverage and pharmaceutical supply chains, where demand has remained stable during the pandemic.
Around 5 billion pallets are used worldwide, and it is estimated that 2 billion in the United States alone, which is equivalent to two-thirds of the way to the moon if they are stacked on top of each other. About 90% are made of wood and the rest of plastic, metal or cardboard. About 513 million new lumber is built in the United States each year, and another 326 million are repaired and put back on the road. Depending on the region, the usual price of $9-12 per wooden pallet may approach $15 this year.