Pallets more plentiful [from the MM&D print edition]

by Array

The number of pallets in the US is going up.

According to the results of a study conducted by the Cleveland, Ohio-based research organization The Freedonia Group Inc, “the size of the US pallet stock is projected to increase 2.4 percent per year to 2.6 billion units in 2017.”

The increase marks a reversal of the most recent trend in pallet stock numbers, since the number of pallets actually decreased 1.1 percent between 2007 and 2012, due to the effects of the recession. During that period, fewer new pallets were purchased, older pallets were more likely to be repaired or refurbished, and other pallets were just left in storage.

According to Freedonia’s numbers, in 2012 wood pallets accounted for 86 percent of all pallets in use. Plastic accounted for eight percent. Metal pallets made up five percent of the stock, and the remaining one percent were corrugated paper.

Taking a closer look at the wood pallet forecast, the number of lumber pallets is expected to increase at a rate of 1.9 percent annually between 2012 and 2017. In dollar terms, sales should climb 5.2 percent a year to US$14.2 billion. Engineered wood pallets won’t be in as much demand, but there will still be enough sold to reverse the decrease measured during the recession. The study pointed to the cost of engineered wood pallets—at twice the cost of lumber pallets—as the main reason why businesses would buy one over the other, as long as they had a choice and weren’t subject to special handling needs or regulations.

Freedonia has an explanation for the apparent discrepancy between sales of lumber pallets and the increase in stock. “Product sales will expand more than twice as fast as the number of pallets in use through 2017 due to companies’ need to rebuild stocks and replace poor quality aging pallets that had accumulated as a result of the 2007-2009 recession. Increasing shipments will require more lumber pallets, which account for more than four-fifths of the pallet total stock.”

Wooden stringer pallets were more plentiful in 2012 than block pallets—765 million versus 284 million, but the growth rate of blocks looks to be stronger in the future. The study predicts by 2022 there will be 821 million stringer pallets and 486 million block pallets.

While the study found demand for new pallets was on the increase, it pointed out that “refurbished pallets will continue to account for well over half the demand total in 2017”.

Freedonia did note that there will be pressures on producers of lumber pallets, not just from makers of plastic, steel or engineered wood products, but also from other products as well.

“Other material handling products, like slip sheets and plastic totes, also offer functional competition for lumber pallets. For instance, slip sheets are either made from paper products or plastic, making them exempt from international chemical or heat treatment requirements. Additionally they are far lighter and require much less space both when carrying a load and in storage, reducing user costs.”

While manufacturing is still the industry that uses the most pal- lets—in 2012 it accounted for 1.7 billion in 2012 and by 2022 that number is expected to grow to just over two billion—warehousing applications also used a lot. In 2012, 566 million pallets were found in warehouses, and by 2022 that number will likely be 721 million.