Pandemic continues to impact on pallet and packaging prices
Further price increases in the wooden pallet and packaging industry are ‘ inevitable ’, according to the European Federation of Wooden Pallet & Packaging Manufacturers ( FEFPEB ), as the impact of the pandemic continues to be felt by companies across Europe and the rest of the world .
The organisation stated that it expects sustained rises in the price of raw materials – including timber and steel – and availability issues in certain markets , to create upwards pressure on prices for several months .
Independent indices from member states showed extraordinarily high price rises during quarter 4 of 2020 , as collated in FEFPEB ’ s quarterly Pallet Timber Price Index . This trend has continued – and in some markets , accelerated – across Europe into 2021 . Some shortages have been reported .
The pallet and packaging sector in most of FEFPEB ’ s member countries showed a decrease in trade across 2020 . However , as the construction trade and other businesses have recovered , volumes have begun to increase again , creating pressure on pallet timber .
Other international factors , including the diversion of Scandinavian and German timber to satisfy demand in the US and Chinese markets , and issues such as a drop in Irish timber production , have also impacted on the situation . In the US , pallet and packaging timber has reportedly doubled in price in recent months .
FEFPEB secretary general Fons Ceelaert 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
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increases on the wood market . As wood costs account for more than 70 per cent of the price of a wooden pallet then pallet price increases are unavoidable .
“ In the end – according to market rules – the raw material is sold to those paying the most , which currently is the US timber market as Bloomberg lumber futures climbed to a record high ( February 18 ). So wooden pallets and packaging producers are facing increasingly non-profitable production , wood shortages and serious economic decisions about slowing or even shutting down production .”
Meanwhile , a sustained and severe imbalance in the international freight industry has disrupted usual trade flows globally , caused a shortage of capacity , and pushed shipping prices up .
FEFPEB , which highlighted the developing situation in autumn 2020 ,
said the increased administrative burden , delays and costs associated with the UK ’ s departure from the EU on December 31 , are causing further impact for businesses . There was also a Brexitrelated surge in demand for ISPM15- compliant pallets and packaging , which was most intense in the weeks immediately before the deadline . This was reportedly still high during February , suggesting a lack of preparation on the part of some customers .
“ Ongoing international pressures on many categories of raw material make further price rises in sectors including wooden pallets and packaging inevitable . The situation is complex and , with supply chains around the world affected , we expect this to continue for several months ,” said Ceelaert .
“ We advise manufacturers and repairers to maintain an ongoing dialogue with their customers to ensure they are wellinformed about this situation . FEFPEB , together with our member associations , is continuing to observe the situation and will issue further updates when needed .”
More information , including the FEFPEB pallet price indices , can be found at www . fefpeb . eu