By: Mitchell Kamps
What is the world pallet market likely to do next? This is a question that can be challenging to answer, yet is continuously on the minds of everyone in the pallet and logistics markets. The last few years we’ve seen some big swings in the pricing and availability of softwood and hardwood, and most pallet companies have had to make creative choices about materials or face large losses.
In Business as Abnormal: Making sense of World Pallet Market Projections Rick LeBlanc summed up his predictions, based on a report on the global pallet market released earlier in 2014 by the Freedonia Group, a research firm specializing in industrial markets. According to LeBlanc, “The core message of the report was that despite the growing popularity of plastic, wooden pallets will still represent 90% of global $51.6 billion demand in 2017. Also, China will overtake North America as the largest regional pallet market.”
The Freedonia Group believes that there will be a 5% increase in the sale of pallets worldwide every year through 2017 due to an increase in manufacturing, particularly in Western Europe and North America. Both the demand for pallets and the number of pallets in circulation will increase, 6.8% and 4.6% respectively: “because of their low cost, wooden pallets will continue to dominate product sales in most areas, representing more than nine-tenths of 2017 global unit demand.”
According to LeBlanc, China will in the future play a key part in the increased demand and use of pallets, as it leads Asian Pacific countries in manufacturing trends and output. Countries in this area of the world currently do not use pallets in their construction, warehousing, and manufacturing sectors nearly as much as Western countries, but they will quickly shift toward using palletized handling, also pushing numbers higher. By 2017 China is poised to overshadow North America in pallet utilization.
The rising cost of timber is a challenge that our market faces, but the cost of wood relative to the cost of plastic should maintain the status quo for now, and with China’s increased pallet use, it’s logical to expect the ratio to skew even higher toward wooden pallets.
Pallet makers at present can count on a stable market for their product, both domestically and internationally, but careful monitoring and planning of pallet production and use statistics will continue to be prudent.