No one expected such a long duration of the Covid-19 pandemic. A large number of restrictions in Europe are of great influence on our behaviour. It is difficult to predict if or when life will return to normal. Despite the vaccination processes that have begun, it is quite a long process for societies to get back to so-called "normal". Nevertheless, industrial companies must act, and with them the logistics that support them. It turns out there is a lot going on in regard pricing, availability of wood and plastic packaging.
Pallets and other wood packaging are key carriers for many industries. However, in Q3 and Q4 2020, a major concern has been the ever-increasing price of wood, which has affected manufacturers' margins. How these changes are described by the head of the European Federation of Pallet and Wood Packaging Manufacturers FEFPEB, Fons Ceelaert?
"On the one hand, wood pallet and packaging manufacturers must meet the needs of their customers. On the other hand, they experience a huge price increase in the wood market. Since wood costs account for more than 70% of the price of a wooden pallet, an increase in pallet prices is inevitable."
A price increase is also observed in plastic packaging, e.g. pallets, euro boxes and types of containers. In this case however, the reasons for price increases have to be sought elsewhere. Let's take a closer look at the reasons behind these changes, and look for alternative solutions, so that we do not have to reduce costs significantly.
Wooden pallet prices keep rising
FEFPE says they expect further price increases in the wood packaging industry due to the impact of the pandemic on businesses. The organization said it expects longer-term increases in raw material prices - including wood and steel - and availability problems in some markets, which will cause price pressures for upcomming months.
"Continued international pressure on many types raw material drive up prices in sectors, including wooden pallets and packaging. The situation is complex due to the affected supply chains and expect this to continue for several months, "said Ceelaert.
Demand for wood in the US, China and other countries
A decline in Irish timber production together with the diversion of Scandinavian and German timber to American and Chinese markets have greatly impacted international demand. In the United States, the price of wood for pallets and packaging has doubled in recent months. Consequently, the American lumber market, as highest bidder, has put extra pressure on the market resulting in record level prices (Bloomberg, data as of Feb. 18, 2021).
Brexit - increased demand for heat treated pallets
The British exit from the European Union on 31.12.2020 had a multitude of consequences for businesses in - or dealing with - the UK. There is a need to adapt to the administrative and logistical requirements in Great Britain. This includes heat treating wooden pallets to ISPM15 standards and an increase in demand for them. It has turned out there is a high demand for these types of pallets in the weeks preceding Brexit, and even until now, there is still strong demand for these pallets in the market.
Read more about adjusting pallets for shipment after Brexit in the article below.
New plastic tax - does it affect plastic pallet prices?
On 01.01.2021, the European Union introduced a plastic tax that covered all member states. This plastic directive will come into effect in the UK whitin short notice.
What does this plastic tax mean?
This new tax means that every EU member will pay for every kilo of plastic that is not recycled. A tax of €0.80 will be paid from member states' budgets to the EU funds. The aim is to change manufacturers' minds about creating recyclable plastic packaging. In an era of sustainable development and support for the climate, this is an important goal on a global scale
What are the consequences of the "Plastic Tax" for consumers?
It is certain that the rapid changes and additional fees for plastic packaging manufacturers will result in increasing costs for consumers. As a result, consumers are likely to make a more conscious descision, paying attention to the type of material used in the production of packaging and increasingly frequent use of secondary or reusable packaging.
Better use plastic packaging in the long run
It is important to know that plastic pallets are long-life items, not single-use plastic. Single-use plastic usually refers to items such as straws, foil, and soda bottles. Also, most pallets except the H1 hygienic pallet are recycled pallets and therefore comply with the sustainability policy of making packaging products last as long as possible and turning plastic into a raw material rather than waste.
Protect your goods with reusable packaging
Have you ever wondered how much plastic you use to secure your pallets? One of the challenges manufacturers face is minimizing the amount of foil. Machine stretch foil finds its use, especially where it is necessary to prepare for transport large amounts of cargo on pallets. It is safe to say that plastic film is the main source of business waste worldwide. Improving efficiency in this area by choosing another type packaging to protect your cargo will positively impact your waste reduction efforts. What else can you consider instead of stretch foil wrapping cartons on a pallet?
- Pallet collars with lid - wooden or plastic, perfectly match the pallets and require no additional materials to protect your goods .
- Euronorm plastic boxes, thanks to standardized size, perfectly match pallet dimensions 1200x800 mm. The pallet has a special edge which prevent loads placed on containers.
Despite price fluctuations, wood is still an economical material for making pallets, pallet collars and other wooden packaging. It is also easy to fit it into a sustainability policy because we can reuse, repair and recycle them. That is why it is worth sourcing used pallets, which will save you costs without sacrificing packaging quality. We can put each used package trought our repair. This way, it can serve for years to come.
Packaging prices keep going up? We have practical solutions for you!
Many companies today have problems with packaging waste recycling and the constantly changing regulations in this area. Therefore, a good solution is to establish cooperation with one of the Packaging Recovery Organizations like Rotom UK
Rotom UK offers a packaging recovery service that saves on the cost of new packaging while helping to protect the environment. No matter what kind of packaging you use: wooden pallets, plastic pallets, plastic or metal containers, we collect empty packaging from you or your customers and take it back to one of our warehouses. Once arrived, we check the packaging for quality and perform any necessary repairs. Afterwards we clean and return each package to you in a just-in-time system.
How about renting packaging instead of buying?
If you need packaging only for a limited time only due to peak production for example, it is worth taking advantage of packaging rental services. This way, you do not incur costs related to expensive pallets and another packaging. After a the peak we collect these carriers from you. You can focus on your business instead of organizing additional storage space or selling unnecessary carriers.
There are many growth opportunities in times of uncertainty and rising packaging prices. Would you like to inquire about the products or services offered by Rotom UK? Feel free to contact us, we answer your questions.
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