Plastic Pallets

Plastic Pallets Global Market Outlook

• The global plastic pallets market was valued at around 340 Million units in 2023E, and it is forecasted to grow at a CAGR of 8–9 percent to reach around $430 Million units by 2027. The market is currently going on a steady growth post the impact caused by the COVID pandemic

• The major driver for growth of Plastic Pallets will be the need for Cost-effective, Durable, User friendly, light weight pallets

• Recycled pallets, real time tracking of pallets are new trends adopted by suppliers to increase the market share

Global Market Size – Plastic Pallet

• Brand-owners can look to adopting plastic pallets if the focus is more on better lifespan and resistance to biological infestation. With the strong market growth forecast, more players are likely to enter this segment ensuring better availability.

• Plastic pallets will witness the fastest growth of 8-9 percent and occupy 6 percent of market share in 2024. Cost is the key constrain to the growth of plastic pallets demand.

Industry Drivers and Constraints : Plastic Pallets

Drivers

• Advantages in Bulk goods transportation: Plastic Pallets are cost effective, efficient for load handling, easy to handle, and resistant to chemicals. Standardized pallets are easier in loading and unloading goods on a truck and can be easily handled with forklifts etc.

• End-use Industries: Apart from demand from the food and beverage industry, which is set to grow significantly in APAC, other major end-use segments, like chemicals, pharmaceutical, construction, metals & mining, etc., are increasingly adopting Plastic Pallets due to benefits, like low cost and more convenient handling

• Low weight alternatives: As part of sustainability options, pallet pooling, pallets made of processed wood and paper are increasingly being adopted to reduce carbon footprint and overall sustainability targets

Constraints

• Raw Material Capacity Crunch: Restrictions across the regions in sourcing of lumber for Plastic Pallets from the forest registries create supply constraints and increase in raw material prices

• Labor Intensive Process: Labor cost contributes to 8-11 percent of the total Wooden Pallet cost, which discourages bulk packaging manufacturers in developed regions with high labor costs to enter the Wooden Pallet segment. Shift to automation is capital intensive

• Limited Innovation: Scope of innovation is limited in Plastic Pallets as it is a fairly simple manufacturing process. However, lightweight, composite pallets are entering the market as part of innovations

Cost Outlook of Plastic Pallets

• HDPE and PP prices continue to remain stable soar in the coming quarters, uptick of raw materials is expected to cause overall price rice of Plastic Pallets by 2-3% in the next one year.

• This cost is passed on by manufacturers and distributors thereby leading to price rise in the region.

Primary Cost Drivers

• Raw Material Cost – HDPE is the primary raw material in the Plastic pallets, thus, the prices of plastic pallets are not expected to be affected drastically by it in the trailing quarter

• Indirect Cost – Medium scale capital investment on plant and machinery is required to set-up the pallet manufacturing factory.

• Maintenance and depreciation of kiln dryers, assembly lines have a significant cost contribution

• Utility Cost- Utility costs are expected to be increase slightly  in the trailing quarter owing to increase in electricity prices in Swede, Finland and  thus machine running cost is not largely impacted by it

• Labor Cost –  Pallet production has transitioned to automatic assembly lines and hence labor requirement is fairly less

Cost Structure Analysis – Plastic Pallets

• Europe has the highest availability of raw materials and movement of pallets within the region. Countries, such as France and Germany, contribute to raw material within Europe. North America is aided by Canada and few countries in US

• The HDPE prices are tracked based on international prices and the availability. HDPE prices are regulated and are governed. Index-based pricing is used in the HDPE sourcing