India and China to Increase Demand for Pallets in the Global Market
02 Sep 2015
The demand for pallets is growing and predicted to continue growing until at least 2017 or 2020, depending on which source you consult. This growth is produced by a rise in demand from the end-user industries, such as in manufacturing and production. It is driven by both British and overseas industry requirements, especially in emerging countries such as India and China.
The Effects of the Recession
In the 2007 to 2009 economic recession, production activity slowed across Europe and North America. As belts were tightened, companies looked to reduce unnecessary expenditure or to put off investing in materials that could be purchased at a later date. One such product to suffer was the humble wooden pallet. Companies decided to replace pallets only when entirely necessary. In combination with the effects of the recession, markets in India and China were able to take advantage of multiple small failures in European and North American companies to make inroads into commercial markets that were previously saturated. The outcome of this has been that Indian industrial production was up 3.80% in 2015 compared to 2014, while China saw a growth of almost 6% in the same time frame.
In addition, recent Chinese government decisions to lower the value of the yuan have been seen as a predictor of even greater production activity in this country. A lower yuan will equal a lower cost across the board for everyday items consumed in the UK. From clothing to industrial parts, China will be a more competitive supplier. This is bound to lead to more contracts and even larger industrial production.
Wooden Pallet Market Forecasts
This combination of growing production in the East and the now-diminished stock of pallets and good-quality reusable pallets in the market will mean new pallet production will need to rise sharply to meet demand.
It is estimated that wood will remain the most broadly used material and will make up around 80% of stocks by 2019. Wood continues to be a hard-wearing and low-cost solution in pallets, but because it already has the lion’s share of the market, it is unlikely to make further gains. Metals and plastics have more room to manoeuvre. Metal is obviously a longer-lasting and considerably more durable material, but the cost of production is higher, and providers considering supplying abroad must also take weight into consideration during transportation.
Plastic Pallets Not Predicted to Affect the Wooden Pallet Market
Plastic continues to be a material of interest, especially in relation to industrial conditions in India and China. Plastic is often associated with commercial catering and food production, and neither of these countries exports a large amount of food to the UK. Plastic pallets are attractive for their recyclable qualities, but again this is currently not a high priority in China and India.
The essential information from the various international reports is that the demand from China and India for wood pallets will continue to increase. By 2017, China alone will require over one-fifth of total global pallet stock.