28 | Sector Market Update: Fencing & Pallets


because of the slower construction market and in the hope that fencing would be more resilient against the cost of living crisis. Because these mills wanted to move stock, prices became “very competitive” in January and February – to the point that one contact saw treated featheredge boards cheaper than a piece of pallet wood. A supplier told TTJ that after sawn fencing prices fell in October and January he had anticipated raising his product prices in April but now, with the season effectively under way, this was unlikely.


Prices have now stabilised a bit and even if demand rises they are unlikely to change considerably as the supply chain will want to move stock from yards and warehouses. The current market may seem quieter but everyone TTJ spoke to said it had to be seen in context.


Above: There is plenty of fencing material available


One supplier said his March figures were down 29% on last year – but were the third best for the month in more than 30 years’ trading.


◄ Even if demand did rise suddenly, there’s plenty of fencing and fencing timber available. Most of the big fencing players build storm calculation into their stock


building so with the lack of stormy weather they went into Easter carrying more stock than usual. At the same time, some UK and Irish mills have moved their focus to fencing


“Our March sales figures would have been a record a couple of years before Covid and we would have gone out for a meal to celebrate so we need to look at it as being a major reduction on last year and see this year as one


RISING COSTS AND FALLING DEMAND


TAKE TOLL ON PALLET SECTOR While economic pressures are impacting pallet demand, TIMCON is launching campaigns to highlight the industry’s positives, says president John Dye


During the past year, most business sectors around the world have faced intense cost pressures. Triggered by the pandemic – and not made any easier by Brexit, and Russia’s invasion of Ukraine (the feeling is that the sector has not felt the full effect of this war and will not fully recover until the economies and demand in Europe start improving) – these have included a rapid increase in the price of energy, with the World Bank last year warning of rises of up to 50% in commodities such as diesel, oil and coal, and other raw materials. The effect was compounded by the enduring imbalance, unreliability, and soaring price of shipping, and generally unstable and unpredictable trading conditions. Businesses have been advised to work closely with their supply chains and customers to mitigate the risks of this unusually challenging period. Raw materials for wooden packaging and


TTJ | May/June 2023 | www.ttjonline.com


pallets have naturally been affected. Timber prices fell slightly at the beginning of last year before rising again mid-year. From then, they began to fall, a trend that continued in Q1 2023. However, while forecasts suggest costs will continue to ease this year and next, they are expected to stay higher than average for the foreseeable future. This will, of course, impact on our operations and those of our suppliers. Our colleagues in Europe have reported similar trends. Towards the end of 2022, FEFPEB issued a warning that, while the price of inputs such as wood and steel have fallen, continuing high prices for energy and fuel were keeping freight rates high. The association said the Transport Intelligence, Upply (the digital platform for transport professionals) and IRU European Road Freight Rates Benchmark Report for Q3 2022 put average European road freight contract prices at an all-time high (129.7


index points), a rise of 5.4 points on Q2 and 19.6 points on the same period in 2021. The report also shows that where the cost of diesel previously accounted for one-third of total operating transport costs, it can now be around 50%. This has inflated the price of processes such as heat treatment and kiln drying. Other inputs, such as labour, have also continued to rise, and now make up a higher proportion of the price of pallets and packaging. This has added further inflationary pressure on the manufacturing and repair sectors.


The wooden pallet market slowed from


October 2022, and as high energy costs and the cost of living impacted on household spending, reducing demand for goods, the usual pre-Christmas uplift in pallet demand did not happen. The market is currently depressed, with every timber industry sector affected by the


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