An update from The Pallet Guys on the current state of the pallet industry
It’s likely that you and your business have noticed pallet price fluctuations and inventory challenges over the past 6+ months that have permeated throughout the entire pallet market.
On this page we’re going to provide a thorough analysis oriented around the causes of these price fluctuations and inventory challenges, and we’ll let you know which causes are currently affecting the pallet industry. All of us at The Pallet Guys understand how important it is on our end to be your trusted pallet supplier while the entire industry is facing certain challenges, and we’ll always continue our strong efforts towards ensuring customer satisfaction through prolonged, successful pallet programs.
But one thing that we highly value at our business is transparency, so here’s what you need to know in terms of an update on the current state of the pallet industry:
What Exactly Is Causing Low Inventory In The Pallet Industry?
The following three broad factors play major roles in inventory dilemmas that permeate throughout the entire pallet industry:
- Circumstantial changes throughout the pallet industry
- Circumstantial changes throughout other industries that rely upon pallets
- Environmental changes
Current Inventory Changes Happening Throughout The Pallet Industry
Industry-wide decreases in pallet inventories are largely connected to changes permeating throughout the pallet industry, and as we all have noticed in recent months new wood pallets have hit all-time price highs. This has subsequently made it more economical for countless businesses to consider used pallets, but as this increased demand in used pallets continues it’s likely that overall supply of used pallets will dry up.
After all, you can’t develop remanufactured or reconditioned pallets without having new pallets fluctuating at a consistent pace.
Changes Throughout Industries That Rely Upon Pallets
Vast pallet inventory decreases can be the result of sudden adjustments throughout countless other industries beyond the actual pallet industry.
A common example of this would be when a company requires specific types of pallets due to changes in their industry standards, which would result in needing different types of pallets for different product shipments. This common scenario leads to higher demand for new pallets, which can subsequently put a strain on overall pallet supply and result in lower inventory levels.
Environmental Changes Affecting The Pallet Industry’s Inventory
Forest fires and other natural disasters can detrimentally impact the pallet industry’s overall supply levels. Saw mills simply must have massive lumber supplies in order to be fully operational and produce the amount of wood that the pallet industry requires, so there can be a ripple effect when a fire or natural disaster ruins a massive amount of lumber source.
Although it’s been about a year since the beginning of the COVID-19 pandemic, the pallet industry is still experiencing the ripple effect that the pandemic initiated last summer in terms of lower lumber flow and output capacity from the nation’s largest lumber suppliers.
What Is Causing Price Adjustments Throughout The Pallet Market?
Price adjustments throughout the pallet industry are largely caused by the following broad factors:
- Lumber market changes
- Supporting market changes
Changes Happening Within Lumber Markets
Wood is of course the main component of pallet manufacturing, which is why the lumber market plays such an integral role in determining the industry-wide prices of pallets. Last summer we saw record-high prices of lumber, which quickly dropped during the last few months of 2020. However, lumber prices have since rebounded since the start of 2021 and are now even higher than they were last summer.
Although the word unprecedented has become eerily too familiar since the beginning of the pandemic, it’s true that the lumber industry has never seen prices quite this high.
Supporting Market Changes
Although many people will only see a series of wooden boards when they look at a pallet, industry specialists will see every particular aspect that goes into the manufacturing of the final product. This includes supporting market products like nail guns, nails, various necessary machines, labor costs, transportation and much more.
All of these factors will of course play huge roles throughout the pallet manufacturing process, which means they subsequently can affect pallet prices as well. When any of these variables experience a rise in cost, there will also be a correlating rise in pallet costs (and vice versa).
The Current Pallet Market Analysis From The Pallet Guys
What’s currently happening throughout the pallet industry is that both the lumber and supporting markets are directly impacting the pricing associated with various pallet products.
Lumber is still at an all-time high, and this was driven by mill production capacity limits associated with the pandemic. It also has a lot to do with current tariffs established on Canadian imports. This increase in lumber costs is causing many businesses to invest in recycled or used pallets, which is contributing to a decreased supply in these options.
Nail costs are also increasing, which is an added cost to pallet manufacturing that affects overall pallet costs.
But what’s important for business leaders to understand is that although the pallet industry can be impacted by outside factors, these current conditions are not permanent. All of us at The Pallet Guys are more than confident that we’ll see many current conditions easing up by about the beginning of 2021’s Q3. This is partly due to sawmill production capacity increases that will decrease the overall demand on used pallets, and will ultimately support the overall stabilization of pallet prices.
Reach Out To The Pallet Guys To Learn More About The Current State Of The Pallet Industry
The Pallet Guys are always here for you and your business as your go-to source for pallet industry news and updates, and our pallet specialists will guide you through every step of your ordering process to ensure that you’re obtaining the best deals available.
Contact us online or call us at 832-895-7555 to get in touch with our pallet specialists and learn more about how we can support your efforts in making the most out of the industry’s current pricing/inventory dilemmas!