Prices are expected to grow at a stable and slightly higher pace as production levels increase due to falling unemployment and greater consumer confidence.
Los Angeles, CA (PRWEB) March 15, 2014
Buyers of wooden pallets have a buyer power score of 3.6 out of 5, reflecting a slightly stronger level of negotiating power for buyers. Buyer negotiation power has declined over the three years to 2013. “Although pallet prices fell slightly in during the recession due to declining demand from major buying industries, they have grown at a slow and steady rate over the three years to 2013 as greater post-recession production levels stimulated demand for logistical materials and resources,” says IBISWorld business research analyst Hayk Muradyan.
Additionally, the rebounding economy has contributed to greater demand for lumber, the main input for newly manufactured wooden pallets. This has generated input cost increases for suppliers and has led to higher prices. However, pallet suppliers maintain diversified operations that include distributing used pallets at comparatively lower prices. This has kept average price increases smaller compared to input cost spikes. As a result buyers have benefited from relatively low price growth rates.
A low volatility environment has also benefited buyers. “Although industrial production levels, manufacturing activity and input costs have experienced moderate to high volatility, the market's pallet management systems have reduced major price fluctuations,” says Muradyan. This has increased buyer negotiating power.
Moderate switching costs and availability of substitutes, however, negatively affect buyer power. Although pallets are made from a wide range of materials, such as plastic, aluminum, corrugated paper, wooden pallets are specifically compatible with existing materials handling equipment and are cheaper than alternatives. In addition, buyers with nonstandard pallet requirements may face high switching costs because of the reduced likelihood of finding compatible suppliers within a reasonable distance. Nonetheless, most frequent-use buyers can obtain favorable contractual arrangements by operating as part of a closed-loop supply chain, which is a system of pallet exchange whereby the pallets are returned directly to the source of the goods that were shipped on the pallets. This can help buyers obtain reused and relatively inexpensive pallets without significant inventory and maintenance costs. Major vendors include P&O Cold Logistics, PECO Pallet Inc., NEPA Pallet & Container Co. Inc. and Rehrig Pacific Company. For more information, visit IBISWorld’s Wood Pallets procurement category market research report page.
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IBISWorld Procurement Report Key Topics
This report is intended to help buyers of wooden pallets. Wood pallets, also known as skids, are a type of equipment used to move unit loads and are designed to allow efficient handling through tools such as forklifts, front loaders or pallet jacks. Pallets are made from sawmilled softwood or hardwood lumber and are primarily supplied by manufacturers, but can also be sourced from pallet pooling service providers and pallet management companies involved in the repair, maintenance and distribution of recycled, pre-used or damaged pallets. This report is not intended for buyers of pallets made from plastic, paper, steel or composite materials such as oriented strand board and plywood.
Recent Price Trend
Product Life Cycle
Total Cost of Ownership
Supply Chain & Vendors
Supply Chain Dynamics
Supply Chain Risk
Market Share Concentration
Vendor Financial Benchmarks
Buying Lead Time
Key RFP Elements
Buyer Power Factors
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