Brexit stifles wood availability and pallet prices

London, UK: Raw material price rises and lack of availability will affect the packaging and pallet market until at least the middle of this year, warns the Timber Packaging and Pallet Confederation.

Among the factors causing problems are unbalances across the global market for many products as the result of the pandemic and Brexit.

Independent index Afry shows that the index price of homegrown pallet timber alone grew by 4.4% from December 2020 to January 2021, after growth of 13.2% in the final quarter of 2020. Baltic imports were reported as being slightly higher at 14.7% in the same period.

The latest Markit/Cips reports published on February 1 point to continuing price rises and availability issue in many materials and products, as demand has rebounded following the easing of the first lockdown periods early in 2020. Pallet wood (and other categories of timber) and steel – both essential for pallet production and reconditioning – are both noted as increasing in price and being in short supply.

Pressure has been increased by the escalating price of timber from the US, and Scandinavian and German timber being diverted there (due in the main to the healthy house building sector), as well as to the strengthening Chinese market. Closer to home, delays in issuing felling licences in Ireland have greatly diminished supplies of pallet timber from this source.

Meanwhile, the impact of increased demand for fencing and other timber products in the UK is continuing.

These issues are being compounded by a worldwide imbalance in container shipping flows, where trade has slowed or stopped, and resumed at different rates according to region. This has caused widespread disruption to usual trade movements, including delays in ports, extensive shortages of containers, and caused significant increases in handling and logistics costs.

Meanwhile, the conclusion of Brexit and the corresponding introduction of new regulations governing trade movements between the EU and UK (and the UK and the rest of the world) on January 1, have compounded these difficulties. Issues reported during the first month of the year include serious delays in customs clearance at key ports such as Felixstowe and increasing administration in the road haulage business, causing significant additional costs to suppliers.

Several businesses involved with, or reliant on, the wooden packaging and pallet business have already issued communications to their customers to explain the situation and warn them to expect unavoidable rises in price for the foreseeable future.

Stuart Hex, secretary general, Timcon, said: “The unprecedented market conditions we reported on towards the end of last year have continued to put pressure on businesses of all kinds. The imbalance in trade across the world, caused by the uneven regional impact of the pandemic have pushed availability down and prices up in many areas, and the new post-Brexit environment has added new layers of complexity and cost. With wood around 70% of the input cost for pallets alone, we expect prices of pallets and packaging to increase and remain high for some time.

“These issues will impact on almost every industry and we recommend that suppliers liaise closely with their customers to keep each another informed about this situation. Timcon will be monitoring the latest developments and communicate these to its members and the market whenever necessary.”

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