Price Forecast: Wood Pallets

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  • Tags : Packaging & Printing | Wood Pallets | Price trend | Price forecast | Procurement research | Category market forecast

Recent Price Trend - Wood Pallets


Wood pallet prices have grown at an estimated annualized rate of 1.5% during the three years to 2017 in response to strengthening demand. In particular, heightened industrial production and growth in the number of businesses have generated strong demand because the inflow of goods into the economy has necessitated the use of material handling goods like wood pallets. As demand has swelled, suppliers have raised their list prices without fear of losing business to competitors.

Input costs, however, have kept prices from rising more rapidly. Lumber prices have fallen from 2014 to 2017, easing costs of production for wood pallet manufacturers. Pallet price growth has also been tempered by the rise of alternative cost-effective supply methods. In particular, pallet pooling companies have increasingly established closed-loop networks where the same pallets are reused, repaired and redistributed multiple times. By repairing and remanufacturing used pallets, suppliers have maintained adequate product quality at much lower costs compared to the cost of manufacturing new pallets. Although new pallets need to be constantly fed into the system, many buyers do not use new pallets at all and instead benefit from the lower costs associated with recycled or pooled pallets. As a result, the wide availability of used and pooled pallets has somewhat suppressed price growth in the three years to 2017.

Additionally, there has been a high level of price volatility during the period, largely brought about by the shifting price of sawmill lumber. Significant price volatility has hurt buyers by making it more difficult for them to forecast costs and budget accordingly, while also reducing buyers’ ability to delay purchasing decisions. As such, buyers should seek contracts when possible to lock in favorable prices before they rise further in the coming years.

 



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