We are currently experiencing unparalleled timber shortages in the UK markets, driven by a number of global events leading to demand outstripping supply.  Raw material prices have increased 35% since Q12016 (UK Poyry Timber Index) driving up the cost of both new and recycled timber pallets. It’s also increasing demand of reconditioned pallets.

 

There are 4 driving forces behind these increases

Increase in demand – driven by Economic recovery in Western Europe and Government backed house building schemes incorporating timber frames. In the UK alone 200,000 new houses were built in 2017, with a target to increase to 300,000 per year.

Weather conditions – are compounding supply shortages. The Baltic region has experienced severe wet weather which has led to forest flooding, severely impacting their ability to supply. Freezing conditions, as low as -20 degrees centigrade, has made it impossible to access frozen forests, operate sawmills and ship product – with many shipping companies imposing ice charges. Sweden is seeing an unseasonal early thaw and thick mud is making the area inaccessible for heavy machinery to harvest trees.

Exchange rates – As the UK has to import much of its timber to meet demand, unfavourable exchange rates driven by Brexit are also impacting the price.  Larger UK mills are opting to limit the production of timber rather than pay these rising prices.

Biomass fuels – Smaller logs typically used by the pallet and packaging industry and being bought in high quantities for subsidised biomass fuel production.

Timcon estimates that over 70% of pallet cost is timber, so it makes it increasingly difficult for manufacturers to absorb increases this scale.  They also stress that wooden pallets and packaging remain by far the most economic and environmentally sustainable choice.

This issue isn’t just affecting pallet production, it has a knock on effect for all types of timber packaging.  As a responsible supplier, Macfarlane Manufacturing are working closely with its customers to manage this situation.

If you are encountering prohibitive price increases and supply issues then there could be opportunities to review your pallet specification and design to ensure that you have the best value solution for your business needs. Now is a great time to start collaborative work innovating your pallet and packaging design to reduce raw materials in the production process.

For inspiration, why not take a look at our case studies to see how we helped customers re-engineer timber packaging.

Contact Macfarlane Manufacturing today to find out how we can help you source the right pallet for your business.

 

 

References:

http://www.bbc.co.uk/news/business-42043084

http://www.leta.lv/eng/home/important/133C9DC2-89DF-DB84-A0DD-73F3E74ED110/

https://www.businesstimes.com.sg/energy-commodities/nordic-forestry-industry-at-risk-from-deep-thaw-below-arctic-circle

http://www.timcon.org/mediacentre/pressreleases/

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