Wooden pallet & packaging body warns supply chain cost pressures remain

Supply chains across Europe have been warned that remaining high prices of inputs other than raw materials are expected to keep costs of essential products such as pallets and packaging high for the foreseeable future.

The European Federation of Wooden Pallet & Packaging Manufacturers (FEFPEB) said according to some European industry indices, the costs of raw materials used to make packaging – pallet wood and steel (for nails) – fell during quarter 3 2022.

But high cost of energy and fuel are pushing upward rates for logistics, and for heat treating and kiln drying timber.

And other higher-priced inputs, including labour, are now making up a considerably larger proportion of the price of goods such as pallets and packaging than they were previously.

This has all pushed the price of these items up significantly.

According to the European Road Freight Rates Benchmark Report, produced by Transport Intelligence, Upply and IRU, in Q3 2022, average European road freight contract prices reached an all-time high, and while the cost of diesel would usually account for one third of total operating transport costs – but may now account for 50% of costs.

Market and consumer data company Statista says the average monthly OPEC basket crude oil price rose from US$85.41 in January 2022 to $117.72 in June 2022.

European Union agency Eurostat said that hourly labour costs rose by 4% in the Euro area in the second quarter of the year and 4.4% compared with the same quarter the previous year.

Increased costs of inputs such as these are impacting on manufacturing businesses of all kinds around Europe, including the pallet and packaging sector.

Fons Ceelaert, Secretary General of FEFPEB, said: “Having reached all-time highs, raw material costs have eased slightly in recent months. However, national associations across Europe are reporting that ongoing highs in the cost of energy, transport and labour are still impacting heavily on the prices paid by manufacturers and repairers.

“Pallet and packaging businesses across Europe are working closely with their customers to minimise the impact of these continuing pressures. In the meantime, FEFPEB will continue to monitor this situation and keep the market informed about the latest developments.”