Wooden Pallets – Procurement Best Practices & Sourcing Strategies

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Wooden Pallets Market Global Size:

ELINT Market Research’s latest wooden pallets procurement market research report projects a global demand of 4.5 billion units in 2023, which is expected to further grow at 4-5% CAGR until the year 2027. 

Market Definition:

The global wooden pallets market provides quality pallet solutions to assist in the secure transportation and repository activities of various products like pharmaceuticals, chemicals, food, and beverages. Further, the wood pallets not only help in delivering delicate items, but also transport heavy-duty goods, like machinery, a bunch of bricks, concrete, electronics, and more. These pallets protect goods from any kind of damage and environmental impact. Moreover, the manufacturers provide different sizes of wooden pallets, like small, medium, and even customized to consumers as per their needs. 

Major Wooden Pallets Market Drivers:

1. Expansion of Pharmaceutical, Chemical, Food & Beverage Industries – 

The foremost key driver for the wooden pallets market is an expansion of the pharmaceutical, chemical, food, and beverages sectors, since wooden pallets assist in the safe transportation and storage actions of various products. Also, these wooden pallets have features like durability and solidity; hence, medical, chemical, food, and drink items remain protected during conveyance. 

2. Rise of Online Retail Stores – 

Another major growth driver for wooden pallets is increasing online retail stores, where individuals are purchasing their personal care and household products. Wooden pallets help e-commerce companies to safely stock and transport supplies. 

3. Extending Pallets Demand in the Construction Sector – 

Besides helping in storing and conveying lightweight items, wooden pallets also largely assist in the construction sector, since they have the capability to transport heavy building materials like bricks, blocks, stones, steel, concrete, wood, and more. 

Wooden Pallets Market Challenges:

1. Supply Shortages of Raw Materials –

One of the key challenges for wooden pallet manufacturers is a shortage in the supply of raw materials, especially wood since it is a main component in pallet production. Thus, this reason causes disruptions in the pallets market. 

2. Restriction on Wood Pallets Transfer Movements – 

Some prime reasons like transportation limitations and regulatory standards cause the wooden pallet-making companies to experience challenges in the timely distribution of products. This aspect depicts the vulnerability of the wood pallet market, which could face impacts due to external factors. 

3. Demand for Eco-Friendly Wood Pallets – 

As awareness of environmental safety is rising, manufacturers are facing difficulty in providing sustainable wood pallet products and executing eco-friendly production practices. Further, this transition can cause massive challenges among traditional wooden pallet makers, since now they are required to change their old manufacturing approaches.

Wooden Pallets Market Opportunities:

1. Ascending Use of Reusable and Refurbished Pallets –

The wooden pallets market is encountering a great opportunity due to the rising customer preference for reusable and refurbished pallets. Hence, manufacturers are vastly investing in environment-friendly pallet-making methods and renovating old pallet practices. This initiative helps in reducing waste and protecting the atmosphere from wood pallet wastes. 

2. Advancement of Technologies –

Presently, multiple wood pallet-making organizations use technological advancements like automation and IoT in pallet production methods. These advancements are helping in automating and managing various redundant tasks, which saves a lot of time and additional costs.

Wooden Pallets Market Segmentation:

1. Wooden Pallets Sizes – 

Businesses are focusing on making different sizes of wooden pallets, like small, medium, or customized that can assist in fulfilling specific requirements of particular industries. Hence, this is a key segmenting factor for the wood pallet market. 

2. Type of Wood –

Another major aspect of segmenting the wooden pallets market is the type of wood, manufacturers are employing in the production process. Softwoods include pine, and hardwoods comprise oak, which have their particular qualities. 

3. Design of Pallets – 

The wood pallets market consists of two prominent pallet designs such as block and stringer. Both of these pallets have heavy-load handling capacities and help various businesses’ specific preferences.

Impactful Cost Components in the Wooden Pallets Market:

In the wooden pallets market, major impactful cost components contain raw material costs of 66%, labor expenses of 12%, and other indirect prices of 22% of the total manufacturing expenditures. These numbers indicate that, any kind of fluctuation in the costs of raw materials and labor could hamper the overall pricing structure of pallets. 

Price Outlook for the Wooden Pallets Market:

The price outlook for the global wooden pallets market displays that in some regions prices have increased between the second and third quarters of 2023. In this context, key countries like North America hold 3.4% and the EU holds 2.9% growth rates. Further, another prime region is Asia-Pacific, where no upsurge has been seen in development rates during the same forecasted period. Moreover, the growth is propelled by multiple factors like global affairs, economic circumstances, market dynamics, etc.; therefore, industry participants operating in this market must pay attention to these aspects of pricing.

Major Supply Markets in the Wooden Pallets Market:

The wooden pallets market exhibits regional trends that provide different statistics for supply markets of various geographic areas. In this classification, the first nation is North America with 30%, the EU with 37%, and Asia with 29% rates. It implies that these domains have significantly fulfilled worldwide wooden pallet demands.

Supplier Power and Buyer Power in the Wooden Pallets Market:

North American and Asian regions have high buyer power, in the wooden pallets market, which means that these countries comprise large count of suppliers, who are selling pallets. While the European Union shows a medium degree of buyer power, where customers have some level of negotiating leverage.

On the flip side, North America and the EU have high supplier power, which means these nations have bargaining rights for wood pallets, and can strongly negotiate with other countries. Contrarily, Asia has lower supplier power; thus, here, the pallets sector is more fragmented, and a vast amount of suppliers are competing. 

Contract Structure in the Wooden Pallets Market:

In the global wooden pallets market, the average contract structure between lumbers and converters generally operates on a quarterly or monthly ground. Within this short period, both parties can adapt prices according to changing lumber costs and market dynamics. Further, once the converter makes the final pallet products, they make contracts with buyers for a 0.5-1-year duration. This agreement guarantees buyers that, they will receive a consistent supply of wooden pallets for a fixed period.

Pricing Models in the Wooden Pallets Market:

The foremost pricing model of the global wooden pallets market is the fixed price in which a set profit margin is added to the total production costs to decide wooden pallets’ prices. It gives clear and stable expenditure to both buyers and sellers. Contrarily, the index-based pricing method connects the pallet expenses to typical benchmarks and lets manufacturers adjust costs depending on market fluctuations.

Leading Suppliers in the Wooden Pallets Market:

Some of the well-known participants in the wooden pallets market include CHEP​, Berry Pallets​, Pallet USA​, Pallet One​, PECO​, LPR​, Rotom​, EPAL​, PGS International​, Scott Group​, Rei do pallet​, Embafort​, Pellegrini Embalagens, Industrial Pallet​, Tripallet​, LEAP​, LOSCAM​, JPR​, Hemant Wood Packaging​, GreenPack Industries​, LOSCAM​, Enviro Pallets​, Aussie Pallets​, Plain Pallets​, and JP Pallets​.