Tighter supplies of wood in global markets have increased wood prices in the last period and will continue to rise in the upcoming period;
Further price increases in the wooden pallet and packaging industry are “inevitable” according to FEFPEB (European Federation of Wooden Pallet & Packaging Manufacturers) as companies across Europe and the rest of the world continue to feel the effects of the pandemic.
The European association expects that sustained price increases for wood raw materials and availability problems in certain markets will put upward pressure on prices for several months.
Independent indices from the member states showed extraordinarily high price increases in the fourth quarter of 2020, as can be seen in the FEFPEB’s quarterly pallet wood price index.
This trend continued across Europe until 2021 – and accelerated in some markets. Some bottlenecks have already been reported.
The pallet and packaging sector in most of the FEFPEB member countries saw a decline in 2020. With the recovery of the construction industry and other branches of the economy, however, the demand for quantities increases again, which puts pressure on pallet wood. Other international factors, including exports of Scandinavian and German timber to meet demand in the US and Chinese markets, or such as a decline in Irish timber production, have also had an impact on the situation. In the US, the price of pallet and packaging lumber has reportedly doubled in recent months.
FEFPEB General Secretary Fons Ceelaert explains: “On the one hand, manufacturers of wooden pallets and packaging have to meet the requirements of their customers as well as increasing and short-term order quantities, on the other hand they experience enormous price increases in the wood market. Since the cost of wood makes up well over 70 percent of the price of a wooden pallet, increases in pallet prices are inevitable.
In the end, according to the rules of the market, the raw material is sold to those who pay the most. This is currently the US timber market as the Bloomberg timber futures rose to a record high (Feb 18th). Wooden pallets and packaging manufacturers are therefore faced with increasingly unprofitable production, wood shortages and serious economic decisions such as reducing or even shutting down production. “
Meanwhile, a persistent and serious imbalance in the international transport and logistics sector has disrupted normal world trade flows, causing a lack of capacity and driving up freight prices.
FEFPEB already pointed out the looming situation in autumn 2020. In addition, the increased administrative burden and the delays and costs associated with the UK’s exit from the EU on December 31st have further effects on companies. There is also a Brexit-related increase in demand for ISPM15-compliant pallets and packaging, which was highest in the weeks immediately before the end of the transition period. It was reportedly still the case in February, suggesting that some customers are still not adequately prepared.
“The ongoing international pressure on many categories of raw materials makes further price increases in sectors such as wooden pallets and packaging inevitable. The situation is complex and, given the supply chains affected around the world, we expect it to stay that way for a few more months, ”concludes Ceelaert.
“We recommend manufacturers and repair shops to maintain a continuous dialogue with their customers to ensure that they are well informed about this situation. The FEFPEB, together with its member associations, is continuing to monitor the situation and will publish further updates if necessary. “
The European Federation of Manufacturers of Wooden Pallets and Packaging (Fédération Européenee des Fabricants de Palettes and Emballages en Bois – FEFPEB) represents European national wooden packaging associations, including the pallets, light packaging and industrial packaging sectors. It was founded in 1946. It is a non-profit organization whose goals include promoting wooden packaging and representing the interests of the European wooden pallet and packaging industry.
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