Pallet demand to grow almost two percent a year

Cleveland, Ohio—The total number of pallets in use in the US is forecast to increase 1.9 percent annually through 2019 to 2.6 billion units, supported by gains in US manufacturing and warehousing activity. This will lead to an increase in pallet demand of 1.7 percent per year to 1.4 billion units.

When manufacturing activity fell during the 2007-2009 economic recession, a significant number of pallets sat idle. Pallet users satisfied product handling requirements with existing stock and purchased new pallets only when absolutely necessary. This lowered the overall quality of the pallet stock, as pallets were not repaired or replaced at normal intervals.

When the economy recovered, users began to replace these lower quality pallets with new units, resulting in pallet demand gains of nearly nine percent per year between 2009 and 2014. These and other trends are presented in Pallets, a new study from The Freedonia Group, Inc., a Cleveland-based industry market research firm.

Demand gains will slow going forward, as much of the replacement of lower quality stock has already occurred. On the other hand, advances in pallet stock will be stronger than those posted between 2009 and 2014.

According to Freedonia analyst Kyle Peters, “Pallet users are already using most if not all of the idle stock that accumulated during the last recession and will have to boost overall stock levels to meet their pallet requirements as manufacturing activity continues to climb.”

Wood is by far the most widely used material, with wood pallets comprising 84 percent of the total stock in 2019 and 93 percent of sales in unit terms. Wood strikes a balance between low cost and high durability and is suitable for use in most applications.

However, because wood already accounts for such a large share of the total pallet market, opportunities for additional growth will be limited and wood pallet demand will be outpaced by that of plastic and metal. Plastic is becoming particularly important in the food and beverage and pharmaceutical industries because of its resistance to insects, fungi, and other types of biological infestation. In addition, plastic has a significantly longer lifespan than wood and can be completely recycled.

Metal pallets, which make up the smallest share of pallet unit sales, will continue to be used in settings where there is a need to carry extremely heavy items or to transport products such as chemicals, which can damage other pallet materials.