Has Brexit had a Long Term Impact on the Pallet Industry?
29 Oct 2016
As the country begins to look beyond Europe for more of its trading relationships, it will certainly be the case that developments elsewhere in the world may become more important. However, the overriding factor at the moment is uncertainty about future outcomes.
There are a number of key drivers of the market in the UK that need to be taken into account. One of these is the welcome increase in manufacturing in the UK. The North West, home to Britain’s traditional manufacturing industries, is seeing a revival in manufacturing. This has led to the UK rejoining the list of the world’s top ten manufacturing nations. This is undoubtedly good news for the pallet industry, as all of those goods need to be transported.
Effect of the Fall in Sterling
The key driver over the next years will be the fall in the value of the pound. Unwelcome as it is to holidaymakers, who can expect to pay more for their mojitos, this is great news for the UK wooden pallet industry, especially when set alongside the increase in the use of home-grown timber in UK sawmills. Sawmills importing timber will find the raw materials for wooden pallets more expensive, whereas those using the home-grown product should see cost stability. And as far as plastic is concerned, the plastic pallet market is growing strongly.
Furthermore, it may even be the case that users of wood and plastic pallets abroad may find it cheaper to source products from the UK.
Businesses here and abroad may also want the certainty of a well-regulated industry. Fake wood pallets have been an ongoing problem in Europe, and the plastic pallet industry has not been immune to this. However, EPAL has been taking an active stance on the issue because counterfeit EPAL Euro pallets don’t meet the hygiene and sanitary standards that are expected and can therefore be dangerous. There’s recently been high-level action in Italy against the owner of a yard making counterfeit EPAL pallets with a fraudulent EPAL stamp.
As the UK seeks to become more global in its outlook, there are also developments elsewhere that should interest the industry, such as the fact that the Panama Canal is getting a new set of locks which will enable it to handle bigger ships. This is undoubtedly going to facilitate global trade with a beneficial effect on the pallet industry.
Brexit Reaction from Logistics Companies
Most of the logistics companies saw a fall in their share value immediately after the Brexit vote, but the Modern Materials Handling website reports that they continue to be committed to the UK while they wait for the changed trading relationship with the EU to be clarified.
UPS continues to invest in the UK with a growing logistics network at the new London Gateway development, and Deutsche Post DHL Group has also stated that it is confident about making adjustments as needed in the post-Brexit world.
However, the CEO of the UK Chamber of Shipping took a more optimistic view, pointing out that while business likes certainty, it also does well where there is opportunity and, to some extent, risk. He said that although there was a lack of short-term certainty, industry could begin to look at what new opportunities might emerge.