Timber Industries LLC is continually seeking new methods to assist our clients in meeting their goals. Today, our Timber Talks is focused on the Recycled Pallet Market and how it is currently impacting the industry.
Pallet recycling is a crucial part of the wood pallet industry. Every year, hundreds of millions of pallets are used to transport and store goods. Because they are used so frequently, pallets get damaged often. There is absolutely no good reason why wood pallets should be thrown away. They can be salvaged, processed and resold in the recycled wood pallet business.
How Does The Process Work?
Pallet recyclers buy or otherwise acquire empty pallets or “cores” (as the empty pallets are referred to) from customers, or if they have little resale value, they may charge the client to take away the empty pallets. Pallet users have gradually become more and more comfortable using reconditioned pallets, which are sold at a substantially lower price than new pallets of similar quality.
Before the pandemic, this was a very well-used practice, with supply chain departments choosing to work alongside pallet recycling companies to acquire used or recycled pallets instead of buying new ones. Now, however, during the pandemic, the recycled pallet market has significantly shrunk and this same supply chain department has decided to do their own sorting, and are keeping all the ones that are good enough to use.
What does this mean for us as a pallet manufacturer?
Once the presorting is done, the pallets left are the broken ones in need of a deeper repair or beyond repair. This situation is taking away a significant amount of our core supply. Recycling businesses are forced now to prepare pallets with fresh wood, resulting in price increases.
Big companies both in the leasing and sales business are now unable to supply their clients’ demands or maintain the price they are accustomed to, changing the market again. Those who were no longer buying new pallets, choosing instead to buy or lease used or recycled ones, are now faced with the possibility of having to go back to new pallets.
The demand for both used/recycled and new pallets is rising and pricing will take a hit. Raw Material and Labor Shortages post-pandemic was already impacting the industry and now the impact will be bigger.
What can we do to minimize the impact?
If you have a good partner doing its best to fulfill your pallet needs, you should work with them as much as possible. Keep the communication open and help them in the process. If you do not have a good pallet partnership, you can call us! We will do our best to walk you through the process and help you find efficiencies within your supply chain operations to make sure you achieve your goals.
The industry is changing once again, but we can work together and find the best way to help each other! What are your thoughts? Is your company having problems with pallet supply? Let us know if we can help!