Why are Wooden Pallets So Expensive? Factors that Influence Pallet Prices
In order to make informed decisions, business owners need a thorough understanding of the costs associated with wooden pallets. We are frequently asked how much certain pallets cost and why certain amounts are charged. Due to the similarity of pallet construction, many customers believe that all pallets should be priced the same. Sadly, this is not the case!
There are actually a variety of factors that contribute to wooden pallet pricing, and on this page we will cover some of them
North American lumber price changes
In terms of overall wooden pallet costs, lumber prices are undoubtedly one of the most important aspects to consider, and at the moment the lumber industry is experiencing a major shortage which has caused prices to skyrocket.
Additionally, the exponential growth in demand over the past year hasn’t helped! In the past year, lumber supplies have been insufficient due to mills’ inability to catch up with production. As a result of all the people investing in home renovations and DIY projects, lumber prices are increasing at an exponential rate.
In order to determine the cost of a new wooden pallet, raw material costs are always a major factor. There will always be a market for certain commodities, like lumber, which has a ripple effect throughout many other industries, like pallets.
Supply chain issues
Another leading factor in pallet price changes is issues with the supply chain. In the recent years the world has undergone problems with the supply chain in the shipping yards, docks, and freight industry. Raw materials and wood prices in the United States are directly affected by these problems. Many of these problems spill over into the pallet industry and cause a rise in prices for both new and used pallets.
Lumber Type Shortages
Most wooden pallets are constructed using southern yellow pine, which is also a major price factor. Pallets can also be made from other types of wood, including hardwoods.
Because of its cost-effectiveness, southern yellow pine is a popular type of wood due to its direct influence on market conditions. Because of all kinds of market conditions, southern yellow pine can often end up being more expensive than other hardwoods.
As of right now, the lumber industry is facing numerous challenges, including a pandemic, wildfires that are burning out of control, beetle infestations, production lapses in mills, economic conditions and even political turmoil. Almost every type of lumber used in pallet manufacturing has been affected by these unprecedented market conditions.
Different board dimensions will be used for different parts of a custom pallet during construction. Custom pallets can be made with hundreds of different board sizes, and the combination that is best for your business depends on its design, load size, weight, transportation method, etc.
In addition to more widespread market conditions, dimensional lumber will also face unique supply/demand challenges.
A good example of this is what is happening now with 2x4s, since lumber mills are now making high-quality 2x4s for builders instead of producing lumber that’s more suitable for pallets. Therefore, 3 and 4 grade 2X4’s are more expensive than normal.
Also is not unusual for there to be shortage of certain pallet sizes. Sometimes there are shortages of the standard 48″ x 40″, while other times it odd sizes or custom pallets that are hard to find.
Cost of labor
While pallets may seem like a simple business to run, there is a lot of labor and logistics that go into operating even a small pallet yard. Pallets must be picked up, repaired, and resold. Pallets are heavy and hard to deal with, which in turn requires a lot of general labor.
Quality assurance is taken very seriously at our company, and we examine and handle every pallet directly by several of our experienced specialists.In addition to pallet costs, a lot of our pallets are labor-intensive.Almost every task requires a considerable amount of labor, which is a factor to keep in mind for business leaders.
Volume of pallet orders
You may also be surprised by the price tag when you are looking for 1-5 or perhaps 15 pallets. This is because pallet yards are not likely to cut you a discount when you just need a few pallets, in fact its common to get charged more. Mainly due to the fact that smaller orders are often harder to deal with and logistically more challenging than bulk orders. Pallet producers usually have tight schedules, so swinging by their dock in your pick up to grab a couple pallets might seem simple, but it presents its own challenges
The volume of orders has a dramatic impact on pallet costs, but people who require frequently purchase pallet orders shouldn’t be surprised. Just about any industry will benefit from bulk purchases, and the pallet industry is no exception.
As labor expenses are spread out over a longer period of time, high-volume orders will lower per pallet prices when considering labor.
Similar to supply chain issues the cost of freight and fuel has also skyrocketed. This directly impacts pallet prices nationwide. Particularly in places like California, Washington, and Oregon. These parts of the country tend to see freight/fuel costs rise the heaviest. In turn they tend to have some of the highest prices per pallet nationwide