Executive Briefings

Market for Pallets in European Logistics Expected to Grow 5 Percent Through 2020

The pallet market in Europe is expected to grow at a CAGR of more than 5 percent during the forecast period of 2016 through 2020, according to Technavio.

Market for Pallets in European Logistics Expected to Grow 5 Percent Through 2020

The research firm's report categorizes the pallet market in Europe market into three major end-user segments: manufacturing, retail, and the transportation and warehousing sector.

Manufacturing

According to Sharan Raj, a lead analyst at Technavio for warehouse and storage research, “This sector accounts for more than two thirds of the EU's exports and thus is a major customer segment of the pallet industry.”

The recovery of the manufacturing sector in Europe and the projected economic expansion worldwide are expected to increase the demand for the material transport sector. As of August 2014, Europe's Purchasing Managers' Index was 51.8. It is further expected to increase during the forecast period. To meet the high level of manufacturing and transportation needs, the demand for pallets will also increase. Procurement and supply chain activities are poised to benefit with an increase in industrial and manufacturing output. Investments in the market depend on downstream demand from manufacturers, which is determined by industrial production and business confidence in the economy.

Retail sector

Retail is the second major end-user of pallets. Most retailers receive shipments and stack their inventory in warehouses on pallets. This sector adopts pallet leasing and pallet pooling as the major strategies for their pallet needs. The retail sector suffered a downturn during the economic recession of 2008. However, with economic recovery, retail consumption is expected to increase. This will increase the volume of consumer and durable goods transported. As the demand for pallets is directly proportional to the volume of consumer and durable goods transported, the demand for pallets in this sector will also increase.

The retail sector primarily uses wooden pallets. This is because plastic pallets are costly, and as most pallets are not returned to the distributors in this sector, the retail sector avoids bearing the cost.

Transportation and warehousing

This sector involves the delivery and storage of inventory, supplies, raw materials, and other goods. The logistics companies involved in the transportation and warehousing sector partner with pallet companies to procure pallets to ship products and return pallets to manufacturers once the shipment is delivered.

Exports from countries in the EU were valued at more than $180bn in February 2015. The pharmaceutical, food, and manufacturing sectors contributed the maximum revenue to the pallet market. Exports from countries in the EU increased by 1.3 percent in 2014 and were valued at more than $6tr.

Source: Technavio

The research firm's report categorizes the pallet market in Europe market into three major end-user segments: manufacturing, retail, and the transportation and warehousing sector.

Manufacturing

According to Sharan Raj, a lead analyst at Technavio for warehouse and storage research, “This sector accounts for more than two thirds of the EU's exports and thus is a major customer segment of the pallet industry.”

The recovery of the manufacturing sector in Europe and the projected economic expansion worldwide are expected to increase the demand for the material transport sector. As of August 2014, Europe's Purchasing Managers' Index was 51.8. It is further expected to increase during the forecast period. To meet the high level of manufacturing and transportation needs, the demand for pallets will also increase. Procurement and supply chain activities are poised to benefit with an increase in industrial and manufacturing output. Investments in the market depend on downstream demand from manufacturers, which is determined by industrial production and business confidence in the economy.

Retail sector

Retail is the second major end-user of pallets. Most retailers receive shipments and stack their inventory in warehouses on pallets. This sector adopts pallet leasing and pallet pooling as the major strategies for their pallet needs. The retail sector suffered a downturn during the economic recession of 2008. However, with economic recovery, retail consumption is expected to increase. This will increase the volume of consumer and durable goods transported. As the demand for pallets is directly proportional to the volume of consumer and durable goods transported, the demand for pallets in this sector will also increase.

The retail sector primarily uses wooden pallets. This is because plastic pallets are costly, and as most pallets are not returned to the distributors in this sector, the retail sector avoids bearing the cost.

Transportation and warehousing

This sector involves the delivery and storage of inventory, supplies, raw materials, and other goods. The logistics companies involved in the transportation and warehousing sector partner with pallet companies to procure pallets to ship products and return pallets to manufacturers once the shipment is delivered.

Exports from countries in the EU were valued at more than $180bn in February 2015. The pharmaceutical, food, and manufacturing sectors contributed the maximum revenue to the pallet market. Exports from countries in the EU increased by 1.3 percent in 2014 and were valued at more than $6tr.

Source: Technavio

Market for Pallets in European Logistics Expected to Grow 5 Percent Through 2020