Further price increases in the wooden pallet and packaging industry are
‘inevitable’, according to the European Federation of Wooden Pallet &
Packaging Manufacturers (FEFPEB), as the impact of the pandemic
continues to be felt by companies across Europe and the rest of the
world.
The organisation stated that it expects sustained rises in the price of raw
materials – including timber and steel – and availability issues in certain
markets, to create upwards pressure on prices for several months.
Independent indices from member states showed extraordinarily high
price rises during quarter 4 of 2020, as collated in FEFPEB’s quarterly
Pallet Timber Price Index. This trend has continued – and in some
markets, accelerated – across Europe into 2021. Some shortages have
been reported.
The pallet and packaging sector in most of FEFPEB’s member countries
showed a decrease in trade across 2020. However, as the construction
trade and other businesses have recovered, volumes have begun to
increase again, creating pressure on pallet timber.
Other international factors, including the diversion of Scandinavian and
German timber to satisfy demand in the US and Chinese markets, and
issues such as a drop in Irish timber production, have also impacted on
the situation. In the US, pallet and packaging timber has reportedly
doubled in price in recent months.
FEFPEB secretary general Fons Ceelaert said: “On the one hand
producers of wooden pallets and packaging need to satisfy their
customers’ demands and growing volumes, but on the other they are
experiencing enormous price increases on the wood market. As wood
costs account for more than 70 per cent of the price of a wooden pallet
then pallet price increases are unavoidable.
“In the end – according to market rules – the raw material is sold to
those paying the most, which currently is the US timber market as
Bloomberg lumber futures climbed to a record high (February 18). So
wooden pallets and packaging producers are facing increasingly nonprofitable production, wood shortages and serious economic decisions
about slowing or even shutting down production.”
Meanwhile, a sustained and severe imbalance in the international freight
industry has disrupted usual trade flows globally, caused a shortage of
capacity, and pushed shipping prices up.
FEFPEB, which highlighted the developing situation in autumn 2020,
said the increased administrative burden, delays and costs associated
with the UK’s departure from the EU on December 31, are causing
further impact for businesses. There was also a Brexit-related surge in
demand for ISPM15-compliant pallets and packaging, which was most
intense in the weeks immediately before the deadline. This was
reportedly still high during February, suggesting a lack of preparation on
the part of some customers.
“Ongoing international pressures on many categories of raw material
make further price rises in sectors including wooden pallets and
packaging inevitable. The situation is complex and, with supply chains
around the world affected, we expect this to continue for several
months,” said Ceelaert.
“We advise manufacturers and repairers to maintain an ongoing
dialogue with their customers to ensure they are well-informed about this
situation. FEFPEB, together with our member associations, is continuing
to observe the situation and will issue further updates when needed.” Source:FEFPEB - Twelve Media
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