2015 forecast and state of the pallet industry

Over the last few years, manufacturing and warehousing has continued to account for the largest share of pallet demand, with the numbers holding steady as we head into 2015. This demand has been driven by the continued recognition of the suitability of recycled pallets as a cost-effective and environmentally responsible form of shipping and hauling goods while avoiding product damage. The rebounding U.S. economy in conjunction with the increased demand for recycled pallets have created a pallet shortage that is here to stay for the foreseeable future.

The back-story on the pallet shortage

It all started with the fall of the housing boom. With new home construction on the decline as a result of the housing fail, the demand for building-grade lumber followed. But the fall didn’t stop there. The housing boom fail also impacted the production of lower-grade lumber. Over the last few years we saw a decline in the production of lower-grade lumber which had a tremendous impact on the pallet industry. There was less lumber available for new pallet construction, and as a result, a much lower supply of new pallets than we were accustomed to.

Canada, for example, took a huge hit with 25% to 30% of their lumber mills going out of business!

How does the new pallet shortage affect the recycled pallet industry

Here’s the short version. There are less new pallets entering the national pallet pool. These new pallets normally become recycled after their first use. This creates two side effects:

  1. Older pallets in disrepair need to be taken out of the pool at a faster pace than new pallets are coming into the pool.
  2. The quality of the pallet pool is reduced because of the lack of new pallet inflow.

Pallet pricing and smart advice for 2015 and beyond

Pallet pricing continues to be based on supply and demand nationwide. Overall pallet pricing has increased nationwide in 2014, but that’s not the biggest problem. We’ve noticed an increase in wide-spread pallet outages – smaller pallet recyclers running out of pallets for small periods of times. These outages often create customer panic and a higher demand for larger, more stable recycled pallet suppliers.

Here’s our best advice. Stay with a supplier that continues to provide uninterrupted pallet services and options to fit your product and budget. For example, combo pallets have become very popular with our clients over the last 2 years and customer interest seems to be holding steady. We see this pallet segment to be the largest growth area of our business going into 2015.

At the end of the day, good suppliers will take the time to inform you of changes in the pallet market before they begin to impact your business. At Nazareth Pallet, we make a conscious effort to keep our customers updated and knowledgeable of our industry.