The pallet sector continues to face tough times, reflected in the recent news of the failure of one of Ireland’s leading pallet manufacturers – Wood Systems in Co Mayo. Such a failure is always going to cause some tremors throughout the supply chain, though in this case rival pallet manufacturer CJ Sheeran has bought the assets of the business.
The fact that there have not been more companies experiencing problems is testimony to the extraordinary resilience of the sector. However, "it is extremely serious," said one pallet manufacturer. "There is weak demand and no signs of improvement."
Palletised food and beverage business was faring better than sectors like building materials, which he described as a "bloodbath".
Pallet buyers facing pressure in their own businesses are being ruthless in cutting costs and looking for cheaper deals and the inclusion of penalty clauses.
"It’s a ridiculous situation but they feel they have a strong hand. People are agreeing to terms that aren’t sustainable but they have stock in the yard that they want to convert into cash."
A lack of business confidence is reflected in greater demand for second-hand pallets or reuse, as customers tighten their logistics operations and drive down pallet specifications.
Another pallet contact complained of too much capacity chasing too few orders. "It’s worst than I’ve seen before due to the duration and intensity of the economic problems," he said.
Recent Office of National Statistics timber and pallet price indices show timber prices edging up and pallet prices trending down.
A continuing weaker euro could lead to a spike in imported pallet wood volumes.
"We’re coming up to winter and we may find a couple of larger companies that are cash rich and decide to buy imported product in bulk in November and December," said an imported pallet wood contact.
