Pallet Prices Remain Sky High. Here’s What It Means For You
For decades, pallets were commonplace and inexpensive. They were so easy to come by that people even made tutorials on how to repurpose them, making them into DIY furniture. Unfortunately, the days of turning old pallets into bookshelves and garden art are on pause. Earlier in 2021, the prices of lumber soared, and the prices of every single wooden pallet rose along with them. But why?
Like countless other problems, the lumber shortage began with COVID
To start, the lockdown in early 2020 had all of us stuck at home. While some of us spontaneously learned to bake bread, thousands of others decided it would be the perfect time to start that DIY home improvement project they’d been putting off. The demand for lumber increased, but there was a problem: The sawmills weren’t even open.
Just like every other industry, operations were cut down to the bare essentials, and they struggled to meet the newly increased demand for lumber. This issue was compounded later in the year when the very same sawmills reopened and had to scramble to find new employees. Working in sawmills isn’t the most lucrative profession, and it’s dangerous too. Finding enough experienced hands proved to be a struggle. At the same time, lowered real-estate prices increased the number of people trying to build houses. The wildfires experienced in the Pacific Northwest didn’t help matters either.
The record-breaking demand combined with the prolonged labor shortage led to what has been dubbed “the great lumber crisis of 2021.” The price per thousand board feet of lumber ranged between $350-500 pre-pandemic. During the peak of the lumber crisis, it rose to $1,515. While prices have begun to fall, they’re not dropping as quickly as we would have hoped. At the start of the pandemic, sawmills expected a housing market crash that never happened. Now, they’re still picking their way out of a major backlog.
The lumber shortage has affected everyone, including freight companies and their customers
The lack of wood has tacked on more than $36,000 to the expense of building a new single-family home. While that price will likely drop over time, the forecast for pallet prices is on the grim side. Each pallet has more than doubled in price, from around $7 to over $15. Even as lumber prices gradually fall, pallet cost may take longer to follow suit. Why? Consumers grew accustomed to e-commerce during the pandemic, and few have returned to their prior shopping habits. The demand for pallets hasn’t dropped in the slightest, so neither have the prices.
What the pallet shortage means for you
The pallet shortage isn’t the end of the world, but all companies who rely on shipping to deliver products to their customers should factor in the increased pallet cost to their bottom line. Back in May 2021, pallets were four times as expensive as they were pre-pandemic. Trucking capacity is also strained, with an ongoing driver shortage worsening the issue.
To lessen the impact on your business operations, we recommend:
- Shopping around for the lowest pallet prices
- Considering pallets made from other materials, like plastic
- Learning how to correctly palletize cargo to maximize efficiency
- And hang in there!
The pallet shortage won’t last forever and we’re all in it together. If you have any questions about purchasing pallets or preparing your packages for shipping, contact us here or give the BYX customer service team a call at 310-323-1880.
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