Followers of our regular Market Update will observe a recurring theme during the last few quarters, with some persistent challenges impacting the UK pallet industry. These continue unabated as other market sectors such as non-essential retail and hospitality open up post-Covid.
UK or Baltic timber remains the first choice for the pallet and packaging industry. There is continued pressure on both timber price and availability. At present, we see no significant relief in this area, factors we broadly expect to continue towards the end of 2021. It is unclear when the situation may begin to correct itself. There have at least been recent reports that activity in the US housing market, one of the most significant drivers of imported timber demand from Europe, has eased off slightly. That said, US timber prices remain well above the market level seen in recent years. Additionally, adjacent industry sectors in the UK for fencing and DIY products continue to compete for timber, and those markets are currently at the peak of their seasonality. We would typically expect these to dissipate towards Q4 if they exhibit their usual pattern.
There is no doubt the dynamics in the sector, including the wider construction sector, are the most difficult we have seen for many years, with price points reaching record highs. Numerous trade associations continue to report that demand globally is dramatically outstripping the capability of the supply chain. In addition to timber, significant raw material constraints persist for products including cement, roof tiles, insulation and plaster. This is further compounded by commodity price increases in steel for nails (iron ore prices have more than doubled) and increased international shipping cost and availability. Recent months have also seen a reduction in haulier availability due to the lack of qualified HGV drivers in the UK. A combination of factors such as increased haulage demand, alleged Brexit impact and a hiatus in driver training throughout the Covid lockdown period has reduced the size of the driver pool.
European, monthly and quarterly timber price movements are well documented in several respected, independent indices; the FEFPEB Pallet Timber Price Index covering UK, Germany, Netherlands, Italy and Sweden, the German HPE, French CEEB and UK Afry indices. All are available online or from your account manager, who will gladly talk through any concerns you may have.
The experience of our buying team, the breadth of Scott Group’s timber supply chain relationships and our successful partnerships with the largest sawmills in the UK and the Baltics have enabled us to maintain continuity of service for our customers. That said, we respectfully encourage all customers to engage with their account manager to ensure we have the best available forecast information to support effective operational planning. Only by doing this can we mutually support each other for business continuity in these challenging times.
Working collaboratively with customers, we are tailoring sustainable solutions to navigate the market challenges together. Reusing pallets is one of the fastest-growing solutions being adopted by the UK construction sector. With more than ten years of experience, our Recover – Repair – Reuse service offers an effective way to reduce cost and eliminate waste.
Similarly, engaging with our pallet buying team is an opportunity to recover costs by selling unwanted pallets to us anywhere in the UK. To arrange a collection or find out more email:
palletcollection@scott-pallets.com
For high-volume pallet users, ready to commit time and resources to a collaborative deep dive into all things pallet-related, we have just launched our new service, OPTIM.
Our OPTIM service will optimise your pallet supply chain, identify its true, whole life cost and pinpoint opportunities to secure significant long-term commercial and environmental benefits, using our years of industry-leading expertise.
