Pallets Market 2024-2033

Pallet Sales Forecast to Rise 4% Per Year

This industry study analyzes the 5.7 billion unit global pallets industry. It presents historical demand data (2013, 2018, and 2023) and forecasts (2028 and 2033) by material (wood, plastic, corrugated and molded pulp, metal) and market (food and beverage manufacturing, other manufacturing, warehousing, construction and other), and region (North America, Central and South America, Western Europe, Eastern Europe, Asia/Pacific, Africa/Mideast. Historical data are provided for 2013, 2018, and 2023 for demand, production, and net exports, with forecasts for 2028 and 2033. Historical market volatility is also addressed. In addition, annual historical and forecast data are provided from 2020 to 2027. Data are provided in unit terms. Pallet demand and pricing in US dollar terms is also addressed. The study also evaluates company market share and competitive analysis on industry competitors including Cabka, Foresco Packaging, PGS Group, Rehrig Pacific, and UFP Industries.

Global demand for pallets is forecast to increase 4.0% per year to 6.9 billion units in 2028, valued at $83.6 billion. Growth will be driven by rising manufacturing activity and the expansion of associated logistics networks worldwide. The pace of gains will improve relative to the 2018-2023 period, with economies continuing to strengthen as the impact of the COVID-19 pandemic fades.

End of Pandemic Era Shifting Priorities for Pallet Manufacturers

The 2020-2023 period was marked by extreme volatility associated with the COVID-19 pandemic and related supply chain disruption. During this span, suppliers were challenged by elevated production costs, insufficient materials supply to meet demand, and high volatility in end markets. This led to issues with pallet shortages that posed challenges for all segments of the industry, including pallet manufacturers, pallet refurbishers, and pallet poolers. Navigating this fast-changing environment represented the key strategic priority for pallet producers.

Pallet shortages continued into 2023, but, by the end of the year, market conditions had largely normalized. Materials prices were down from their peaks, supply chains were more robust, and end markets were reaching the close of the short-term pandemic recovery period. As a result, priorities for pallet manufacturers are shifting going forward, and strategies are shifting toward addressing longer term trends facing the industry.

Efforts to Address Sustainability Concerns Reshaping Markets

Sustainability represents a critical topic across industries, and the environmental impact of pallets is receiving increasing attention among all end markets. While wood pallets are a fairly environmentally friendly product in their own right, plastic pallets are increasingly preferred in this regard, and these are expected to gain market share going forward.

However, supply chain practices can have a greater impact on sustainability than the specific material used. In order to achieve their promised sustainability benefits, plastic pallets must have a high rate of end-of-life recapture for materials reuse. As a result, plastic pallet manufacturers are increasingly incentivized to step up their participation in their customers’ supply chains. A growing number of plastic pallet manufacturers are developing business areas like pallet rentals and supply chain optimization services, once mainly the purview of pallet management services firms. Going forward, the ability to provide such services will represent a key advantage for pallet suppliers looking to compete on sustainability.

Further Opportunities for Smart Pallets

With attention to supply chains increasing, pallet providers are finding expanded opportunities to offer value-added services with smart pallets, which can track the movement of goods to reduce waste and optimize distribution. However, the sensors used for smart pallets are best installed at the point of manufacture, and the historical fragmentation and commoditization of pallets represents an obstacle to large-scale deployment. In order to develop the smart pallet market, greater collaboration will be required between pallet manufacturers, pallet poolers, and smart technology suppliers.

Historical Market Trends

Demand for pallets is linked primarily with manufacturing activity, as the vast majority of manufactured products are shipped on pallets from the factory floor to their intermediate and final destinations.

Other factors impacting demand for pallets on a year-to-year basis include:

• general economic growth, which can impact whether customers buy new pallets or decide to keep and refurbish existing pallet stock.
• changes in the logistics infrastructure and how things are shipped
• customer preferences for material handling systems
• trends in the use of pallet management services
• raw material availability, especially for wood resources

Market value is also influenced by factors such as raw material costs, supply and demand balances, and the product mix of pallet types used.

Due to the fact that wood pallets usually have a lifespan of no more than two to three years, the number of pallets already in use in a country provides a high level of ongoing replacement demand, correlating to the overall size of the manufacturing sector. Expansion of manufacturing industries also drives new pallet purchases as the size of the needed pallet stock grows; however, these purchases are far more volatile than those associated with replacement demand.

Due to this volatility, pallet demand can change significantly year-over-year in periods of economic downturn and recovery. For example, sales in unit terms fell by 15% during the first year of the COVID-19 pandemic in 2020, followed by a 14% increase as markets recovered in 2021. This period also featured extreme market disruption associated with material cost volatility, as elevated material costs drove large pallet price hikes and led to nearly 50% year-over-year increase in the market size in dollar terms in 2021.

Production by Region

Global production of pallets is projected to increase 4.0% per year to 6.9 billion units in 2028. The Asia/Pacific region will account for the largest share of gains, rising to 44% of global pallet output in 2028. Growth will be driven by rising production of pallets for domestic use in fast-growing industrializing nations in the region.

China was the world’s largest pallet producer in 2023, followed by the US. These two countries have the world’s largest domestic markets for pallets by far. High US production levels are also attributable to the industry’s long history in the country, as modern pallet use largely originated in the US.

As pallet users generally purchase from suppliers located nearby to minimize the cost of transporting empty pallets, industry shipment levels are largely dependent on domestic demand in most nations.

• The pallet industry in any given country is relatively insular, with pallet manufacturers producing the types of pallets local customers are likely to purchase without those customers needing to look abroad for pallets.
• In areas where timber for wood pallets is scarce, supplies can be sourced from nations with large forest stocks, or as is the case with Western Europe, wood pallets can be imported from nearby nations that do have abundant forests, like Poland and the Czech Republic.
• Production of plastic pallets is somewhat more concentrated, with high levels of production in China, Taiwan, and other Asian countries. This is partly due to the relative popularity of plastic pallets in the region. The lighter weight of plastic pallets also can make these more useful for overseas trade, although this is tempered by their higher cost.

Pallet Size Trends

Pallet sizes in a country tend to be standardized, as standardization assists with handling, storage, and other aspects of transportation and logistics. Standards for pallet sizes are set both formally and informally, as the natural benefits of standardization tend to push markets toward a handful of common sizes.

Globally, there are four major areas with distinct pallet sizes:

• The US has its own set of unique pallet sizes, which are also used in Canada and Mexico due to the high level of trade between these countries.
• Australia has a unique pallet design, the Australian standard pallet, which is almost exclusively used domestically.
• Europe and Asia both have distinct pallet sizes that are rarely used outside these regions.

In addition, there are a handful of sizes that see broad international use across multiple regions.

Regional differences in pallet sizes provide opportunities for pallet management firms and have contributed to the growth of this industry. For example, pallet management firms may specialize in acquiring pallets that have entered a country from overseas and selling these pallets to exporters shipping to appropriate countries.

Ongoing trends in pallet sizes include:

• Smaller pallets (often referred to as “half-pallets”) are becoming increasingly popular, particularly in the US. These pallets are valued by retailers for their ability to be used as display stands.
• Rising automation is providing an incentive for increased standardization of pallet sizes within countries.

However, market inertia is likely to lead to continued variation in standard pallet sizes between countries.

Global Economic & Manufacturing Outlook

Due to the diverse range of industries that make use of pallets in product distribution and storage, global pallet demand is linked to broad changes in the level of manufacturing activity worldwide. Use of pallets is also connected to the overall level of economic development, as countries with modernizing supply chains tend to make greater use of pallets over time for their labor-saving and organizational benefits.

Between 2023 and 2028, global GDP is forecast to increase 3.0% per year, while global manufacturing value added is projected to rise 3.4% per year. Both figures will represent a moderate improvement over 2018-2023 trends, which were hampered by the effects of the COVID-19 pandemic. Industrializing and lower-income nations worldwide will continue to post development-driven growth, while economic conditions in mature markets are expected to improve somewhat as the effects of the pandemic fade.