20 WESTERN PALLET
to cycle through their stock quickly. It reduces the risk levels. “So I think that for the low-grade world, that's probably the most amount of hedging that you'll see. Everybody always tries to buy the dip - that's the case in any type of market.”
With high lumber and pallet prices, as well as industry consolidation, finding cores can be difficult
“Core supply has stabilized, and I was seeing a little bit of a light at the end of the tunnel, but then we saw these acquisitions, and it just kind of stopped everything. Core prices have increased and it's definitely still a little tight out there. In Southern California, so many of us are just trying to get our hands on what we can.”
One company said they are stretching their core supply by repairing as many pallets as possible. They are supplementing with new material for repair rather than dismantling repairable pallets for material recovery. Repairing badly damaged pallets can make for poor quality. “We have customers that right now, they just want a pallet.”
Alternative materials for pallet repair?
Wood composite boards aren’t a great idea. If they get wet they can break down quickly. You are better off using expendable lumber.
One recycler that previously sent dismantled plywood top decks to the wood recycler is now ripping the recovered plywood sheets into deck boards. They are accepted by some customers.
How has the quality of incoming cores changed in recent years?
Previously, out of 600 pallets, 200 would be good to go, according to one recycler. Now it is rare to get cores that you can put right into your #2 or #1 pile. They almost all need to be repaired. Whereas companies that sell cores would previously sell unsorted pallets, now they often sort through them to reduce their pallet purchase requirement. So instead of needing a load per week, maybe they only need one every second week. Cores are expensive and in poor condition, driving up pallet prices.
Are you looking further afield for cores?
Extremely high freight costs limit that opportunity, so even with higher pallet prices, the business case for looking further afield is often not attractive.
Another participant agreed, noting that with consolidation, larger players are releasing cores in certain markets, but core purchasers still face high freight costs.