Pallet manufacturers rely on automation to boost productivity and raise the capacity of their manufacturing plants. Pallet manufacturers are incorporating sophisticated logistic systems to improve their services.

According to Sharan Raj, a lead analyst at Technavio for research on warehouse and storage, “Vendors are incorporating tracking technology in pallets, which is driven by the increased need for food safety as they travel through the product distribution system. This has also led to an increase in the use of plastic pallets due to the advantage of shipping on plastic pallets, where new tracking technologies can be easily planted on them as compared to other pallets.”

The demand for lumber used for manufacturing pallets is high in the construction and furniture industries. Sawmills are unable to meet the growing demand. As a result of the shortage of lumber in the market, pallet manufacturers find it difficult to complete their orders. Therefore, the supply of raw materials to pallet manufacturers has been adversely affected.

Large retailers are shifting to block pallets over stringer pallets. Block pallets are expected to account for a large proportion of the market by 2019. Costco and Walmart announced their preference for block pallets. This trend is aiding the growth of large pallet poolers such as CHEP and PECO, which only deals in block pallets, and puts small, family-owned, or independent producers in pressure who manufacture stringer pallets.

Pallet rental pools have a significant hold over the pallet market. Walmart and Costco have announced that they will accept pallets only from three large pooling companies. This has had an industry-wide impact and intensified competition in the market. Small firms will have to adapt to the changing business environment and enhance their product specifications to meet the trends in the industry to compete in the market. CHEP alone held 58 percent of the market share in pallet pooling operations in North America in 2014.

Source: Technavio