(Ecofin Agency) – The Russian-Ukrainian crisis continues to stress the global transport chain. In addition to soaring fuel prices, the scarcity and exorbitant costs of wooden pallets are becoming real challenges.
Rising prices for shipping pallets is a new variable that is beginning to disrupt the global supply chain. Added to soaring bunker costs, it has recently boosted ocean freight rates. Through recent press releases, the European Pallet Association (EPAL) and the European Federation of Wooden Pallet and Packaging Manufacturers (FEFPEB) had warned of possible price increases for these loading units due to the war. in Ukraine.
These wooden devices, used in the storage, handling and transport of certain categories of goods, already experienced a drop in their production and distribution volume before the crisis, mainly fueled by an imbalance between supply and demand. The price per new pallet has gone from 7 to 29 €, while recycled pallets are currently sold at 10 €, against 4 or 5 € before.
Ukraine, a major producer of industrial wood and exporter of pallets, is in fact no longer able to supply the 15 million units it delivered per year. Experts also reveal that the three players in the armed conflict (Ukraine, Belarus and Russia) alone accounted for 25% of the wood used in the total production of pallets for Europe.
Also at the height of the Covid-19 pandemic, the shortcomings observed in the return logistics chain regarding the return of rented pallets continue to influence the increase in costs. Added to this is the high cost of the wood used as raw material.
Shippers who generally include these elements in determining the cost price will once again pass them on to end consumers. This could prolong the generalized inflation that set in following the outbreak of the pandemic.
Henoc Dossa