The Western Pallet Association is pleased to welcome the following new members.
JUNE 2022
Lumber, Cores and Trucking
Inflation has skyrocketed in the last year and has translated into higher costs “across the board” for pallet companies. Additionally, consolidation in the pallet industry has made it more difficult to find and procure pallet cores in numerous markets.
In the June WPA Master Learning Group, peers connected to discuss the effects of these market forces, how we are dealing with them, and offered tips or strategies to help each other overcome the challenges. The session was once again expertly facilitated by Glenn Meeks of Woodview Media.
Below are some of the topics raised and selected responses from attendees, edited for brevity or paraphrased:
Dealing with price concession requests as lumber prices retreat
As prices fall, customers can be quick to ask for discounts. We are trying to make concessions as we're able, based on running averages but with the other costs such as labor, nails, freight, and fuel all going up, the lower lumber prices don’t necessarily translate into comparable pallet price reductions. Some pallet companies are responding to customer requests for cost reduction opportunities through the use of PDS to further lightweight pallets, but many customers have already gone through this exercise in the past.
Some buyers are more open to changing board thickness or species to help bring costs down.
Sawmills try to recover grade lumber rather than low-grade material, and prices often are reported as aggregates of several different items. “We’re operating in one small corner of the world that really operates to the beat of its own drum. They are having open-minded conversations with customers. Customers need to understand that even though prices are dropping, you may still be working through expensive inventory already purchased. Those are difficult conversations to have, but, it's important that we're having them because we need to be in business tomorrow.”
Hedging lumber prices in a volatile market
It is challenging to hedge when focused on low-grade lumber for industrial applications. It's been difficult for anybody to carry a heavy inventory. In the last year, the market changed so much in such a short period that customers don't want to get caught having a deep inventory when prices drop significantly. As a result, companies have kept light inventories
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