Businesses depending on the circular economy and the humble wooden pallet to ensure billions of products get through the supply chain understand that sustainability is more than a buzzword and that the market reflects the product itself – durable and absorbent to rough treatment and the elements, while its financial raison d’tre ‘goes with the grain’ to ensure the economic and environmental benefits all stack up in what I term ECOnomics.
In a climate where the climate emergency is top of the political and commercial agenda, those same businesses understand that price fluctuations are inevitable rather than existential – they are for the greater, not just the Greta good, by which I mean sustainability goes beyond personality politics and soundbites. Plastic packaging, albeit an alternative, is not necessarily a cheap one and, whilst it can certainly work well, it isn’t always sustainable in the long-term.
This growing band of circular economy businesses – around nine per cent of the global economy – have chosen to re-engineer their supply chains in a way that not only reduces their carbon footprint now, but also their longer term costs, as well as leaving a legacy for Greta and the Generation Y, who are asking daily ‘why’ so little is still being done to reverse the heating of the planet.
We are at a point in the financial cycle where the global cost of wood for pallet packaging is high, according to the pallet industry bodies Timcon in the UK and FEFPEB in Europe, both of which have recorded likely northward trends in price as a result of global events.
Timcon points out that according to Independent index Afry, the price of homegrown pallet timber alone grew by 4.4 per cent from December 2020 to January 2021, after growth of 13.2 per cent in the final quarter of 2020. Other global events, including the Coronavirus pandemic and Brexit, have also had an inflationary impact.
In a statement, Timcon said the latest Markit/Chartered Institute of Procurement and Supply (CIPS) reports published on February 1 point to continuing price rises and availability issues in many materials and products, as demand has rebounded following the easing of the first lockdown periods early in 2020. Pallet wood (and other categories of timber) and steel – both essential for pallet production and reconditioning – are both noted as increasing in price and being in short supply.
In addition, the European Federation of Wooden Pallet and Packaging Manufacturers (FEFPEB), announced that further price increases in the wooden pallet and packaging industry are ‘inevitable,’ as the impact of the pandemic continues to be felt by companies across Europe and the rest of the world, due to the subsequent increases in the price of raw materials and availability issues in certain markets, to create upwards pressure on prices for several months.
A global economy is susceptible to market demands so shortages in raw materials inevitably puts pressure on price points whether it’s the need for heat treated pallets post-Brexit or timber being redeployed from one market to another to satisfy need.
In its February statement, FEFPEB highlights 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 which have also impacted on the situation. In the US, pallet and packaging timber has reportedly doubled in price in recent months.
Issues like COVID and Brexit are disruptive but not permanent, and the price will stabilise over the next few weeks and months as sustainability looks beyond short-term pain to the long-term gain – not just for the continuity of logistics fulfilment but for future generations of Gretas and the greater good.
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