Market Update – Spring 2019

Market Update – Spring 2019

Market Trends

UK or Baltic sourced softwood remains the timber of choice for the pallet and packaging industry and as supply and demand have levelled, both timber availability and price have improved in quarter one of 2019. However, the global timber market’s continued potential to influence our domestic market remains apparent. Notable current market influences include:

• UK log prices holding firm
• Increased availability in mainland Europe due to beetle-damaged wood resulting in reduced activity from German, French and other buyers in the Baltic states
• High (Brexit driven) stock levels of Swedish timber at UK merchants
• USA timber prices recovering lost ground, albeit slowly
• Pressure on available shipping in northern Europe and the Baltics

European, quarterly timber price movements are well documented in a number of respected, independent indices including the FEFPEB Pallet Timber Price Index covering UK, Germany, Netherlands, Italy and Sweden, the German HPE, French CEEB and UK Poyry indices (all available either online or from your account manager).

PRN (Packaging Waste Recovery Note)

It is well recognised that timber pallets and packaging are the most sustainable choice for buyers of transit packaging, but purchasing behaviours are changing. There is evidence of increasing numbers of packaging buyers, challenged with managing the rising costs associated with both raw material price, as well as rising PRN (Packaging Waste Recovery Note) costs, revising their pallet and timber packaging sourcing strategy. This was reflected in the recently published report, UK Wood Pallet & Packaging Market in 2017, which was jointly commissioned by Timcon and the Forestry Commission. This shows a small drop in new pallet manufacture but a 15% increase in repair in the same period. These findings were corroborated by 2017 ONS (Office of National Statistics) data.

A wood PRN is the evidence required by companies who use wood packaging; manufacturers, those who fill it, sell it, give it away or import it, to prove compliance and show they have met their obligation under the UK packaging waste directive. They are issued by companies that process wood waste, for example, panel board manufacturers and those that make animal bedding. Timber pallets and packaging which are reused are without obligation.

The combined impact of reduced timber exports, increasing recycling targets and a shortage in meeting both the general recycling obligation and the wood specific obligation, have been the driving forces in pushing wood PRN prices up. From 2017 to 2018 the price rose from £2-5 per tonne to £65 per tonne. The implication for a 10,000 tonne obligation would be a rise in cost from £50,000 to a staggering £650,000. Despite a small fall back in Q1 2019 prices the consensus is that high pricing looks set to prevail at least until the current consultation paper on reforming the UK packaging producer responsibility system is finalised.

For additional information on wood PRNs visit:

Brexit – No Deal

As uncertainty continues, the Department of Farming and Rural Affairs (DEFRA) has advised that if the UK leaves the EU without a deal, all controlled wooden packaging material (WPM), including pallets, crates, boxes, cable drums, spools and dunnage, moving between the UK and the EU will need to be compliant with the stringent requirements of International Standard for Phytosanitary Measure No. 15 (ISPM15) and may be subject to official checks either upon entry to the EU or after entry. The purpose of the regulation is to prevent or reduce the risk of spreading quarantine pests found in WPM. DEFRA, Timcon and the UK packaging industry are working with European counterparts to seek assurances that a pragmatic approach will be adopted.

Gov.UK guidance on importing and exporting plants and plant products in the UK leaves the EU without a deal

TIMCON guidance for industry

Pallet compliance with ISPM15 regulations is achieved through kilning by accredited suppliers. The concerning issue is the total available kiln capacity in the UK, which is deemed to fall well short of the calculated requirement to produce sufficient quantities of compliant pallets in a commercially acceptable timescale.

ISPM15 accredited suppliers include:

The Way Forward

Timber pallet and packaging buyers are looking to their suppliers to support them to navigate the latest market challenges in sourcing cost-effective, sustainable solutions to move their goods, within both their domestic and export markets. There is a desire to get closer to their pallet supply chain. By working collaboratively with an experienced, proactive supplier to jointly develop tailored solutions, buyers will ensure their business is ready to face the emerging challenges of 2019 and beyond. This could include exploring a range of initiatives such as carrying out a full, on-site technical pallet performance audit, redesigning pallet specifications to optimise operational performance (trip rates), safety criteria and timber utilisation, sharing distribution data to support pallet recovery, repair, and reuse, thus avoiding a PRN obligation, switching from new pallets to reconditioned pallets, working smarter to reduce logistics costs by establishing onsite operations or making joint backhaul arrangements.

As innovative, national suppliers of timber pallets and packaging, Scott Pallets and HLC (Part of the Scott Group) are evolving their range of customer-focused solutions to respond to a changing market and the opportunity that the circular economy, which promotes wood reuse ahead of recycling, creates.

Suppliers that invest in experienced account managers with credible technical support have the potential to add real customer value, at a time when buyers may be struggling to manage a commodity currently exposed to the influences of political change. To access support and begin a conversation, contact us to discuss your business’ needs:

Or to find out more about our range of sustainable pallets solutions:

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