A new monthly market briefing available exclusively to IndustryEdge’s Wood Market Edge subscribers details how Australia’s need for timber pallets is under enormous stress. Sources: IndustryEdge, FWPA, ABS
Australia relies on pallets, both hardwood and softwood to move goods around the nation and to the rest of the world.
The pallet pool systems (Chep is mainly hardwood and Loscam is mainly softwood) are an integral part of the global supply chain. Hardwood pallets are typically more sturdy and robust and therefore able to carry more weight. Softwood pallets are lighter and more versatile but don’t last as long.
Each year, around 1.6 million new pallets are calculated to be added to the hardwood pallet pool, as older pallets come out of service and repairs are required to others.
At a headline level, Victoria’s native forests were supply as many as one million of those new pallets each year. The closure of access to native forests in Victoria, and to a lesser extent, Western Australia, places hardwood pallet supply under enormous pressure.
That pressure will be reflected back onto softwood pallets, it already is being as can be observed in the chart below. The pressure will mount as time passes, hardwood pallets come out of service and existing inventories are drawn down.
But there are few market participants who would consider there is much more capacity for the softwood supply chain to deliver more pallet timber. There is certainly not enough to bridge the supply gap, in any event.
The chart shows sawn softwood packaging grade sales totalled 674,789 m3 year-ended April 2023, accounting for 23.0% of annual sawn softwood sales, down just 0.1% from the previous month’s record proportion.
The annualised 4.1% increase in packaging grade sales is significant because all other major locally produced grades experienced declines over the same period.=
Annual Sawn Softwood Packaging Grade Sales: Dec ’02 – Apr ’23 (m3 & Proportion)
Imports of timber pallets and other packaging made from timber were valued at AUDFob27.721 million year-ended April 2023, up a massive 48.3% on the prior year. The new record continues a long run of increased imports that commenced at the beginning of the pandemic in early 2020.
Unfortunately, import data is only available by value, with no volume data reported. The next chart shows the value of imports on a monthly basis, and in total, on an aggregate basis.
Timber Packaging Imports by Grade: Jan ‘18 – Apr ’23 (AUDFob Million)
Recent work on packaging materials has seen IndustryEdge turn its attention to ‘plastic’ equivalents for timber pallets and related materials. The data is, frankly, a little sketchy, but here we can see that the value of imports lifted 6.4% to AUDFob197.5 million over the year-ended April 2023. This packaging material is specifically pallets, cases, crates and boxes. No single use plastic bags included.
Plastic Packaging Imports by Grade: Jan ‘18 – Apr ’23 (AUDFob Million)
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