A shortage of timber and transport has seen the demand for pallets in the UK – and across the world – higher than it has ever been. This means it’s become very challenging for supply chain specialists and material handling companies to secure a regular order of pallets, which are often critical to their business.
Why do companies use pallets?
For fast-moving goods in particular, but for any goods really, pallets provide a safe and efficient way to shift a high volume of products. With a pallet, you can load the product, secure it with shrink wrap and then stack them neatly and safely. They can also be moved safely and securely around the warehouse, using forklift trucks, and loaded onto vehicles to be transported, with considerable ease.
Therefore, pallets are a critical element of the supply chain for companies who are shifting products and goods around the UK, across Europe and the wider world.
Is there a shortage of pallets in the UK?
There is currently a shortage of pallets, not only in the UK, but across the globe. This is due to a number of factors, which starts with the shortage of the materials to produce the pallets. These include the timber for the pallets; the steel for the nails (that build the pallets) and even the treatment pallet companies use to restore used pallets.
Add to that the current transport and logistic challenges we are experiencing, due to the fall out of Brexit and also due to the pandemic, pallets aren’t being shifted around the transport network as efficiently as they’d usually be. There is a current shortage in long haul and lorry drivers across the UK as we now have access to less EU labour, with other legislations such as IR35 compounding the resource challenge.
All of this adds up to a shortage of pallets in the UK and across the world.
Why does a shortage affect the cost of pallets?
When there is a shortage in supply, the price for materials and cost of transport goes up. Bloomberg reported a 400% increase in pallet prices in the spring this year. In general they have increased approximately 100% across the board. The Price Per Index (PPI) report for the pallet sector, according to Bloomberg, has reported increases for 14 consecutive months.
When the prices of the materials increase and the transport and logistics sector is strained, the demand increases for the pallets, also. If a material price increases then this has a ripple effect throughout the supply chain; the pallet company has to pass on the costs in order to make money; the shipping company has to pass on costs and, ultimately, the end user (the company buying the pallets) will have to pay more.
Will pallet prices continue to rise?
It looks likely that pallet prices are set to continue for the foreseeable future. The price for timber is set to remain high throughout the rest of 2021. That, combined with the transport network bottle-neck, will ensure pallet prices continue to remain high for the rest of 2021 and, most likely, the first quarter of 2022.
How can I ensure I get a consistent pallet supply?
At TIPCI, we are supporting our customers throughout this challenging time, by ensuring we meet their supply and demand needs. For virgin pallets, we are working with our supply chain to ensure a consistent supply of timber from sustainable sources, at the best price. We are producing new pallets in-house by sourcing the timber for the panels and producing the blocks, using our in-house designed and built crusher machine, which turns waste wood into heat-treated, premium grade pallet blocks. We provide pallet recycling services for our customers, which enables us to re-use – or repurpose – old pallets to get them back into the supply chain as quickly as possible. If the recycled pallets are not suitable to be reused, we process them through the crushing machine to produce the blocks. Our goal is to become the first UK-based zero waste pallet company. With this purpose in mind, we’re helping our customers by ensuring a continuous supply of quality pallets – virgin or reused – by contributing to the pallet supply chain in the most efficient, productive and sustainable manner.
You might be interested to read our blog article on The UK’s first pallet block wood crusher
For more information about TIPCI Group and our services, please contact us or view our services
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