NEW FORECASTS (2023 - 2026)
The Pallets Market is segmented by Types (Wood, Plastic), End-User (Transportation & Warehousing, Food & Beverage, Pharmaceutical, Retail), and Geography.
The pallets market is expected to register a CAGR of 5.8% during the forecast period (2023 - 2026). As supply chains become steadily global and customers demand greater transparency as to how products and materials move through them. So, by embedding RFID chips directly into pallet materials, it is possible to track and trace individual pallets in real time. Pallet tracking can help businesses manage recalls and expiration dates, minimizing product loss and getting items to their end-users efficiently and cost-effectively.
Increasing demand for plastic pallets across the industry verticals is driving the market. For the past three decades, wooden pallets have been adopted due to their strength and easy manufacturing process; however, it has many disadvantages such as less durability, moisture absorption, splintering, break easily. Nowadays, logistic and shipment companies are shifting towards plastic pallets owing to its advantage, such as being lightweight and environmentally friendly, and growing awareness to reduce carbon footprint is also increasing the plastic pallet demand. Also, the demand for HDPE material is increasing in the automotive and shipping industry due to its ability to handle heavy loads. HDPE disposable plastic pallets are extensively used in the food and beverage industry as they are resistant to organic and inorganic chemicals at normal temperatures. According to Woodworking Network, the demand for plastic pallets in the United States is increasing yearly at a high growth rate.
The adoption of pallets for transportation purposes drives the market. The freight industry entails firms that move bulk goods as part of an integrated, multimodal logistics network. According to the Organization for Economic Cooperation and Development (OECD), the global freight volumes will expand more than fourfold by 2025, and road freight dominates the segment, controlling nearly one-third of the total global logistics spend. For instance, the motorcycle is an example of a product where the use of pallets is highly required. It cannot steadily stand by itself because its base is composed of 2 wheels and relying on a motorcycle stand would not assure that it would not fall, especially when inside a running cargo truck. Mounting the product on a pallet and tightly strapping it on, preventing it from falling and bumping to other valuable products. So, due to increasing freight volumes, the demand for pallets will continue to increase in the future.
Limiting availability and the high price of raw materials for manufacturing pallets is the reason that restrains the market growth. As the market is captured by wooden pallets, which are made of lumber, often fluctuations in the prices challenge the market to grow. Lumber prices typically rise in the spring as builders stock up for construction season, and due to bad weather and less penetration towards the home building, the prices fluctuate.
Scope of the Report
A pallet is a flat panel supporting goods during transportation, mostly through wooden and plastic pallets. The major end-users of pallets include durable and non-durable goods manufacturers and non-manufacturing sectors such as food & beverages, retail, transportation & warehousing, etc.
Key Market Trends
Wood Still Holds the Significant Share in The Market
· Wooden pallets play important roles in the movement of safe, effective transport and storage platforms throughout the handling and distribution process worldwide. Although there are standardized versions, pallets are produced in many sizes and configurations to accommodate different handling equipment (generally forklifts) and cargoes.
· Pallet construction is becoming more standardized in many countries. For instance, in Europe, with a migration to the EUR pallet (specified by European Pallet Association), the most prevalent size of wood pallet is 800mm x 1,200mm unit. However, wooden pallet sizes and designs are much less standardized in North America, where most pallets in use are custom designed to suit transport and shipping configurations.
· Over 70% of all wood pallets are now recycled, which is a much higher recycling rate than aluminum, paper, or plastic. Also, trees are usually not cut down to make pallets. The wood which is used for pallets is a by-product of the timber used in the construction of houses and furniture.
· According to the European Federation of Wooden Pallet & Packaging Manufacturers, price increases in the wooden pallet and packaging industry was deemed inevitable due to the pandemic creating ripples in the supply chain. Independent indices from the member states in Europe indicated a significant price rise during Q4 2020 as outlined in the FEFPEB’s quarterly Pallet Timber Price Index and is expected to increase across Europe in 2021.
· However, competition from substitute products such as plastic and steel pallets and the fragmented nature of the industry is giving challenge to the growth in the United States. But the industry could benefit from adopting better supply chain management practices in their strategic planning and operations, both to ensure the supply of raw materials and ensure better service to customers.
The Changing Competitive Landscape
The pallets market is fragmented in nature due to the presence of several small and large manufacturers who compete against one another in terms of prices and quality. The rise of green consumerism is driving the growth of corrugated pallets as means of sustainable packaging. Corrugated pallets have been gaining traction, with established players innovating the strength of the pallets for varied applications. Further, companies operating in the studied segment are anticipated to accelerate the supply chain transition to environmentally sustainable solutions.