Pallet Pooling Europe Market Intelligence

Industry Outlook & Drivers

Regional Market Outlook on Pallet Pooling in Europe

How is the market outlook for pallet pooling in Europe?

• Lumber supply levels have been facing disruptions in Europe due to the ongoing trade wars in last  couple of months. Europe is expected to continue experience raw material supply gaps in the coming quarters causing a 4-6 percent hike in pallet lumber prices, expected to result in uptick of 4-5 percent in wooden pallet cost by Q1 2019
• Implementation of stricter regulations for cleanliness (e.g. ISMP 15) of wooden pallets, demand for non-wood pallets is expected to increase at  4-5 percent until 2021
• Buyers should consider prospects in gradual adoption of plastic or other non-wooden pallets options which can offer better performance in terms of cost and operation

Pallet Buying versus Pallet Pooling

• Pooling reduces pressure on CAPEX and eliminates storage costs
• Poolers maintain their own tracking systems to track supply chain of pallet
• It also helps in offsetting CO2 emissions with collaborative supply chain solutions

Global Pallet Market Outlook

 Though pallet demand is expected to steadily grow in the next 3-5 years, raw material (lumber) supply is expected to be constrained thereby causing constrained supply of pallets in Europe

Pallet market is expected to be dominated by APAC which currently holds 34 percent market share and expected to reach 40 percent market share by 2021. Growth is attributed to large demand from F&B, pharmaceutical segments

Global Pallet Market Outlook (2017-2021F)

• Growing manufacturing activities driven by urbanization in emerging markets like China, India, Brazil, etc. is expected to drive the pallets market at 4-5 percent until 2021
• Europe and North America are expected to continue being the major manufacturing hubs over the forecast period and sustain their demand owing to resurge in manufacturing activities, increased consumer spending on housing and construction activities
• APAC will see the largest demand due to high growth of Food and Beverage, Pharmaceutical segment. China would lead the growth in APAC market and is expected to grow at 10 percent CAGR through 2015-2020

Wooden pallets are expected to continue dominating pallet market due to their cost effectiveness. However, adoption of plastic pallets can be beneficial in longer run as they offer better life and flexibility to tracking technologies

In spite of the transition by some companies from wooden pallets to plastic pallets, majority of the market will continue to employ wooden pallets due to their low cost and sustainability features

Global Pallet Pooling Market Outlook

Wooden pallet pooling contributes ~90 percent of the global pallet pooling due to their cost efficiency over plastic pallets. However, demand for washable, hygienic and insect-free pallets may drive demand for plastic pallets in the future.Pooling pallets reduces the pressure of expenditure by eliminating huge payments of pallet procurement making it a cost efficient approach for sourcing pallets. However, adoption is mostly witness in Europe and North America where the preference for pooling is above 70 percent.Global wooden pallet pooling service market is expected to grow at 8-9% primarily driven by rapid industrialization and increasing global trade. Strict cleanliness standards in the pharmaceutical industry is also a major driver for growth of pallet pooling services

North America leads the global consumption owing to strong manufacturing sector and presence of global pallet pooling companies. North America and Europe are expected to remain dominant until 2021.Pooling services in APAC are expected to witness a gradual uptrend in the near term driven by its growing industrialization rate Food and FMCG are expected to be the major end use segments for Pallet Pooling services

European Pallet Pooling Market Outlook

European lumber prices have continued to rise over past few months and are expected to rise in coming quarters. Therefore, it would benefit to gradually explore opportunities in plastic pallet adoption which provide better performance

Western Europe contributes to majority of the demand due to concentration of industrial activity. Newer plastic pallets like Rackpal, North American Pallet, Eco Pal are all highly efficient pallet designs aimed to serve markets predominantly catered by wooden pallets

European Wooden Pallet Pooling Growth Prospects

• European pallet market is highly standardized and is headed towards automation, advanced tracking devices to improve efficiency
• Plastic pallets are expected to witness swifter growth of 6-7 percent until 2021 compared to other pallet formats in next 3-5 years owing to its lightweight, recyclable, ease of handling and cleaning properties

Preference for Block Pallets

• Increasing preference for block pallets in the recent years by retail giants is expected to fuel the growth of pallets

Economic Recovery

• Recovery of the manufacturing sector in Europe is expected to escalate the demand for pallets

Lack of Innovation

Euro wooden pallets are fairly standard product and have very little scope for innovation. This has caused the penetration of Plastic and composite pallets which can be embedded with smart features like tracking capability, lightweight, longer life, etc.

European Pallet Pooling Trends

The UK pallet industry is facing challenges with Brexit resulting a decline in demand for new pallets. Germany and Belgium experienced a gradual price decline past year, as a result of lower timber and fuel costs; against a fairly consistent demand.

 Automation on the Move

• Pallet producers are increasingly relying on automation for loading/unloading of pallets and to boost productivity, as their efficiency goes up when automated
• Incorporation of sophisticated logistics system to improve services is also becoming increasingly popular, as most end-user industries demand that their products be tracked

RFID Technology

• Tracking chips (RFID technology) are being incorporated in pallets. This is done with ease on plastic than on wood, with an anticipated growth of 9 percent between 2016 and 2020

Government Favors Pallet Pooling

• With growing European and government encouragement for the development of a circular economy, the increase in recovery, reuse and recycling of pallets is a positive trend

Thin Margins among Suppliers

• Margin on EPAL pallets is marginal
• Food product manufacturers prefer new pallets, creating a regular influx of used pallets into the value chain. CHEP's quarter pallets are witnessing a degree of success among retailers