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STRANGE MARKET FOR WOODEN PALLETS AND PACKAGING
Domestic and global uncertainties are changing the dynamics of the pallets and packing market. TIMCON president John Dye outlines the current mood
New house building remains below pre-pandemic
averages, and infrastructure projects are progressing slowly in the face of both domestic and global economic challenges, as well as ongoing political uncertainty. Many developers and public sector clients appear to be holding back on larger projects while these issues persist. Overall, it’s a strange dynamic: wood products
are moving, but not according to traditional, more predictable patterns of demand.
Above: Many pallet manufacturers and sawmills report that they are “comfortably busy” PHOTO: ISTOCK
The UK wood pallet and packaging industry continues to operate in an unusual environment, with reports of steady trading in some areas, but general unpredictability too. Many pallet manufacturers and sawmills report
that they are “comfortably busy” – although by no means overwhelmed – with healthy demand for their products. However, there is some confusion about the underlying drivers of this trend, given the generally subdued performance of key sectors like construction.
TIGHTER AVAILABILITY While overall timber availability remains relatively stable, supplies of certain sizes are tightening, which is having an impact on pallet manufacturing. Prices have remained flat since December, following a prolonged period of volatility – offering some stability for buyers at least. We have also heard reports of slower turnaround times for reconditioned and pooled pallets. Goods would appear to be taking longer to be unpacked and pallets returned into circulation, suggesting sluggish movement in retail and other sectors using pooled systems. This could be linked to generally weaker consumer demand. International shipping prices remain high due to a combination of factors, including the time and cost impacts of disruption in regions such as the Red Sea. Fluctuations in exchange rates also continue to influence the cost of timber imports and pricing. ■
The raising of the energy price cap from April 1 meant electricity prices have more than doubled for businesses that have ended their fixed deals. Added to this, the employers’ National Insurance contribution, water costs and wages have also risen. Another pointed to the rising cost of mechanics’ labour, which is no small expense considering the number of trucks and forklifts his business used. One contact was fearful of the impact of the NI increase.
“I will wait to see the impact on us. It’s not as simple as saying it’s gone from 11% to 15% because the starting threshold has been reduced. I think some businesses may look to shed one in every 10 people, and the bigger the organisation, the bigger the impact,” he said. “If unemployment surges then we could all be in a mess.”
The sawmiller also noted that the increase in employers’ NI contributions and the higher
minimum wage were starting to impact on his business. Cost of living challenges for individuals also remained and he thought it unlikely that consumer spending would increase in the short term. “Certainly, the state of the UK economy is suppressing general construction activity, whether that’s house building, infrastructure projects or RMI. That said, demand levels are positive at the moment for British timber,” the sawmiller added. “The savvy buyer, however, will be looking to the future and asking ‘how will supply meet increased levels of demand when activity does pick up?’”. Timber prices are creeping up and any increase in the cost of imported material is likely to be followed by increases for home- grown timber. “We’re experiencing a rising market for fencing-related timber products,” said the sawmiller. “Imported fencing products seem
less readily available than previous years, especially from certain parts of northern Europe, and that has changed the supply/ demand balance towards lower availability and rising prices.”
He added that any supply issues were not affecting his business, however, as the business increased inventory levels in Q4 last year “to ensure that high levels of service and good product availability were in place throughout the busiest parts of the year”. In early April one contact reported there had been no increase in timber costs – only to contact TTJ a few days later to say he had received notification of a 2.7% increase from two suppliers, effective from May. “We will see if we can absorb this,” he said. The weather, however, remains one of the biggest influences on fencing demand so, like most of us, everyone along the supply chain will be hoping for a long, hot summer. ■
www.ttjonline.com | May/June 2025 | TTJ
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