Reduce the impact of timber price increases
If you are using timber pallets or timber-based packaging hold on tight, 2021 could prove to be a bumpy ride. Current conditions have created “a perfect storm” as timber shortages drive price increases in the market.
What is causing shortages in timber supply?
There are 3 main reasons for the timber shortages:
Pandemic with a boom – Covid-19 restrictions in the workplace and lockdowns have seen mill stock plummet to all-time lows. UK and European mills are working at full capacity but finding it very difficult to build stock levels back up, especially whilst managing the increased demand that a pandemic boom has brought in the construction and DIY industries. An attractive US housing market is diverting supply from Swedish and German mills otherwise destined for the UK. With those households lucky enough to have high levels of disposable income continuing to invest in household and garden projects, high timber demand seems set to continue into 2021.
Raw materials – There are also issues impacting softwood material going into the mills. Mild winters in Finland mean that the ground is extremely wet, making it difficult to harvest trees. Ireland is experiencing issues with felling licencing, with the Irish timber market expected to decline by 50% over the coming months. Baltic mills are experiencing raw material shortages which means that they are unable to sustain additional shifts, directly impacting supply to the UK. Canadian pine beetles have destroyed 15 years’ worth of trees, felling approximately 730 cubic meters of pine between 2000 and 2015 in British Columbia. It is estimated that this will reduce the overall manufacturing capability of British Columbia by 40%.
Brexit – The final piece of the jigsaw is the new Brexit regulations which came into effect on January 1st, these state that all shipments to European countries containing timber packaging must be heat treated to ISPM standard. This is adding unprecedented pressures on timber kiln service providers and adding further pressure to an already unstable supply chain.
What you can do to mitigate price increases
As a responsible supplier, we are working with customers to mitigate the impact of these increases. By reviewing the specification of their incumbent timber packaging, we can assess opportunities to reengineer the products to ensure that they have the best value solutions in place.
Packaging reengineering can reduce the amount of raw material used, which brings down unit cost as well as positively impacting operational costs too. For example, a switch to a lighter material can reduce overall shipment weight, whilst maximising cubage can deliver improved palletisation. The knock-on effect of these changes can positively impact vehicle utilisation and can reduce the cost of transportation.
Packaging simplification can speed up handling and packing times, which will allow your operatives to do more in less time, improving operational efficiency and giving you more scope to manage business growth.
The work we do is supported with SolidWorks 3D CAD software, allowing us to explore and design in collaboration with our customers. Our Kongsberg C66 CAD table, the largest digital cutting table available for packaging production in Europe, allows us to produce prototypes quickly in a range of materials.
There has never been a better time to review your packaging to uncover savings throughout the operation. If you’re interested in finding out more about the impact of packaging throughout business operations, you may like to read our previous blog Reduce the hidden costs in your operation, or perhaps explore some of our previous customer work in our case studies.
For high or low volume applications, Macfarlane can provide objective advice, innovative design, and quality manufacturing to exacting standards which will ensure appropriate protection throughout the supply chain. Contact us today to find out how we can help your business mitigate increased costs.