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The fast-moving consumer goods (FMCG) industry requires agility and rapid reactions to market movements.
Pallets are a key element to consider in the FMCG industry, with 93% of traded goods coming into contact with a pallet. Fastmarkets provides price data on GMA (Grocery Manufacturers’ Association) pallets, the most common pallet size in the United States. They are essential to enabling smooth transport, storage and handling across fast-moving supply chains.
Given the nature of these goods – high-volume, low-price sales – profit margins are inherently narrow. However, recent years have seen a further squeeze on these margins due to escalating costs, with changes in pallet prices having a significant impact on profit margins.
Fastmarkets pallet news and pricing services provides reliable and transparent data for those working in sourcing, logistics and production.
Wooden pallets have an essential role to play in the transportation of goods. They allow products to be batched together and transported easily, saving both time and money at all stages of the supply chain.
While some companies may choose to bundle the cost of pallets into their logistics and transportation budget, rather than tracking the price of pallets separately, having access to reliable, market-reflective price data is still crucial to understanding your bottom line.
There are currently around 2 billion pallets circulated annually in the US market, but the market has been extremely opaque, with little data available for those in the FMCG industry to analyse to understand the role pallets play in their supply chain.
Low-grade lumber is the base material for softwood pallets, which make up around 70% of the pallets in the market today.
As a result, movements in low-grade lumber prices have a significant impact on the market.
There were two huge price swings in 2021 and 2022, with prices tripling almost overnight due to supply-chain scarcity and high demand coming out of the pandemic. This meant that distributors had to pay double the price they’d usually pay for pallets, with many companies left in the lurch as the shortage of pallets meant they weren’t able to transport their goods.
The low-grade lumber used to construct pallets is a by-product of framing lumber that’s used in housing construction. This means during booms in the housing market, demand for framing lumber soars to meet construction needs, which in turn leads to a higher production of low-grade lumber to produce pallets.
As a result, the price of low-grade lumber is highly correlated with the price of framing lumber.
The US housing market is currently in decline, facing challenges including inflation, high-interest rates and regional disparities in housing starts and sales. However, the industry is a resilient one.
Not sure where to start? Download our checklist for FMCG procurement professionals to help you create effective procurement strategies.
In 2024, US pallet producers used around 8.45 BBF of softwood lumber. In the same year, 24% of the softwood lumber in the US was imported from Canada, meaning shifts in the Canadian market have a solid knock-on effect on US lumber prices.
Our forecast, which takes into account that framing lumber will see a higher amount imported, as it has a higher value proposition than the low-grade lumber used for pallets, assumes approximately 10% of low-grade lumber used for pallets comes from Canada, leaving the US with a shortfall of 0.845 BBF.
The landscape of the Canadian lumber market is changing: In August, Canadian Prime Minister Mark Carney announced a substantial support package for the Canadian softwood lumber industry, totaling C$1.2 billion.
This comes at a critical time for an industry faced with a host of challenges, including ongoing fiber constraints in British Columbia, weak global construction markets and, of course, hefty duties on shipments to the largest single market for Canadian lumber exports, the United States.
As Canadian supply tightens, pallet prices are set to rise towards the end of 2025 and into 2026.
Need to stay on top of pallet market movements? Speak to one of our experts about the Fastmarkets pallets news and pricing services for price data, market news and analysis.