Date: 06.05.2022

Ukraine invasion drives timber prices up and pallet supply down

The European Pallet Association (EPAL) and the European Federation of Wooden Pallet and Packaging Manufacturers (FEFPEB) have warned of a shortage of wooden pallets and packaging that is already being felt.

The war in Ukraine and the shutdown of production is having serious consequences for European pallet manufacturers, with packaging prices increasing, as evidenced by a French trade association who confirm that pallet prices have risen from €7 to €29, an increase of >400% increase.

The associations said that pallets are increasingly difficult to find and more expensive to produce in a context of soaring raw material costs and in particular the price of wood.

Pallets are critical components in the global transportation, because they are the common interface for every stage – handling, shipping, trucks, forklifts – and make the supply chain work. They have become a key component of transport and warehousing especially over the last few decades and are an essential tool to  industry. What you see in your local supermarket on a shelf has invariably been on at least one pallet in its movement, and usually several.

Without pallets, supply chains would revert to handling one box at a time, which is the way cargo moved, before the pallet was introduced over a hundred years ago.

Ukraine exported over 2.7 million m³ of lumber last year, a significant part of which was used for the production of wooden pallets and packaging in Europe, while Ukraine also independently produced and exported to European states about 15 million of its own locally manufactured pallets.

In addition to stopping deliveries from Ukraine, the wooden pallet and packaging market will also face difficulties with imports from the Russian Federation and Belarus, which annually supplied about 7.6 million m³ of lumber to the EU – that’s a huge amount of timber boards to be extracted from the supply chain.

Alternative suppliers from Scandinavia, Germany and the Baltic countries are currently not yet able to fully cover the possible shortage.

The result, for companies further down the line, is a sudden rise in pallet prices and the risk of running out of a product that’s often overlooked yet essential to supply chains, as it allows businesses to stack goods and transport them efficiently with reduced loading time. This affects all modes of transport, from high value electronic goods by air freight, through to foodstuffs by truck. Something to be aware of, that will add to the cost of goods.

To discuss your packaging and pallet requirements, please contact our export team, who can take you through your options and solutions. If you are seeing a shortfall in supply from current suppliers of pallets we have a network to recommend and assist with, what will hopefully be, a short term challenge that will often not be considered as a problem.