Last February, the European Federation of Wooden Pallet & Packaging Manufacturers warned that the extraordinarily high timber prices experienced in late 2020 would accelerate across Europe in 2021. They weren’t kidding. By July, statistics released in the FEFPEB index for the second quarter of 2021 showed the price of homegrown timber had increased by a staggering 52.2 percent over the last year. As timber accounts for 70 percent of the cost of a wood pallet, prices for wood pallets, including refurbished wood pallets, have spiked in dramatic fashion.
Factors increasing the cost of wood
There are a number of factors, many of them pandemic related, driving up the cost of timber and as a result, wood pallets:
- Increased competition for timber from the construction industry.
- Diversion of timber from Germany and Scandinavia to the United States and China.
- Drop in timber production in Ireland.
- Overall supply chain disruptions slowing timber shipments.
The increase in timber prices are the largest seen in Europe’s wood pallet industry in five years. Expectations are that prices of timber and wood pallets will continue to rise going into 2022.
Europe’s commercial enterprises are heavily dependent upon wood pallets despite modern, benefit-enhanced options like composite and plastic pallets. Unfortunately, the costs of loyalty to wood are high. In addition to higher prices, wood pallet customers are reporting significant issues with the quality of refurbished pallets as producers and poolers have scrambled to ensure availability.
Never a robust shipping platform—the estimated number of trips for a well-maintained wood pallet is about 15 trips—wood pallets naturally degrade over time. Boards break. Wood splinters. Nails come loose. With the need to keep wood pallets in the pool, companies are not repairing pallets as often as they should, and they are reusing pallets longer than the normal life cycle.
Further complicating matters is how wood pallets are typically stored: outside in the weather. Even kiln-dried timber absorbs moisture. The longer a wood pallet is exposed to rain, snow, and humidity, the more moisture it absorbs. A wood pallet that weighs 27 or 28 kilos when new can increase to 32 to 33 kilos with moisture gain, making it heavier to handle while adding shipping weight and cost.
Excess moisture causes other issues. It’s a magnet for mildew, bacteria, and insect pests. Moisture from compromised wood pallets can also transfer to their load. Even if products are shrink-wrapped, moisture can permeate the load and condensation can form inside the wrap. This is a huge problem for hygiene and moisture-sensitive products like fresh produce, pharmaceuticals, electronics, and other packaging materials like foil and film.
The global pandemic has also raised awareness of the need for enhanced hygiene across the supply chain. Wood pallets are a cause for concern as there is no way of knowing what types of products a particular pallet has carried. For example, a wood pallet may be used in the meat industry and exposed to and/or may have absorbed various fluids before being returned to the pallet pool.
All of this—higher prices, lower quality, possible contamination, and the threat of damaged goods—spells trouble for European wood pallets users.
Looking beyond wood pallets to ensure quality and availability
The world of pallets is not all a tale of woe. If anything, recent events have opened the door to new opportunities such as plastic and composite pallets. As the cost differential between wood and composite pallets has narrowed, RM2 has experienced a significant increase in inquiries about its BLOCKPal™ hygienic fiberglass composite pallets.
One of the main questions in the market is the cost of quality. With the diminished quality of wood pallets, the quality inherent in composite and plastic pallets is suddenly front and center. What makes both formats increasingly attractive is the ability of the material to maintain structural and performance integrity across rigorous supply chains, to truly sanitize the pallets between loads, their impervious nature to moisture, and lastly, the long life cycle. Plastic pallet poolers claim plastic pallets can be used upwards of 100 times. RM2’s BLOCKPal™ composite pallets can be used more than 150 times.
Composite pallets are uniquely suited for Europe’s sophisticated supply chains and material handling systems. Though the lightest of the three main pallet categories, fiberglass pallets are exceptionally strong and impact-resistant. Even with rough handling, RM2’s BLOCKPal™ pallets stay on spec so handling across automated systems is not hindered by broken bits and boards.
Composite pallets also have something wood pallets don’t: integrated tracking technology. With all of the supply chain disruptions and delays, companies can no longer live in the dark of wood-pallet supply chains. RM2 ELIoT® IoT technology for its composite pallets enables real-time pallet traceability, real-time temperature tracking, supply chain visibility, and a wealth of actionable data. At the same time, its technology now integrates with supply chain IT systems, further elevating access to usable data for supply chain and logistics teams.
As European companies consider replacing wood pallets with more modern materials, it must be noted that plastic pallets have an Achilles’ heel: the growing issue of theft. Not just one or two pallets here and another two or three there. Theft of plastic pallets is taking place on an industrial scale.
There are simple reasons for this. As the European Union has demanded recycled content be included across a growing range of products, demand for recycled resin has exploded. And what could be easier than stealing plastic pallets, sometimes by the truckload, grinding them up and selling the material. Single material plastic pallets—usually high-density polyethylene or polypropylene—are easy to recycle and there’s absolutely no way to track them once they’re ground. Composites are not a target as they are difficult to recycle and worth nothing reground.
With all of the current and inherent woes of wood pallets, the reasons for European companies to move to higher performing, more sustainable solutions have never been more clear or compelling. With our limited timber resources and land at a premium, short-lived wooden pallets seem an unsustainable luxury. Better to rely on pallet solutions that can last a decade or more, leveraging resources and technology for the greater good.
We invite you to learn more about RM2’s BLOCKPal™ composite pallets by visiting our website. For meaningful details on exactly how our modern, technology-enhanced pallets will benefit your business, let’s connect and share a conversation.