12/05/2022

The sale of plastic pallets - Accelerates its growth trend in the current scenario

The sale of plastic pallets - Accelerates its growth trend in the current scenario
The events of recent years are affecting the global economy with a financial impact on companies and the market itself. The rising cost of raw materials and even more so the limited availability of semi-finished and finished products have led to a new procurement model and a distortion of traditional supply chain processes.

As a consequence of the scenario still being defined, it seems clear that the long-term goal of individual countries and communities should be to minimise dependence on external resources by following a Gandhian model of development.
 
However, as can be seen in the graph extracted from the Long Term Economy report, logistics is a sector that cannot be done without, indeed it underpins sustainable development in the long term. As much as we can reduce dependencies on external resources and factors, the exchange of - raw materials, semi-finished and finished goods - between countries is a key to ensuring prosperity and economic stability. The goal of logistics in the medium to long term can only be to support the welfare distributed across the planet as efficiently as possible and with minimal environmental impact.
 
Source: Association Long Term Economy

How can we face a sustainable future where logistics will be both a success factor and a packaging waste problem?

The EU is leading the way on this issue with a specific directive: Packaging and Packaging Waste Directive which covers both packaging design and waste management.The latest amendment to the directive contains updated measures to prevent the generation of packaging waste by promoting its reuse, recycling and other forms of recovery.

SPECIFIC RECYCLING TARGETS
DIRECTIVE 94/62/EC OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 20 December 1994 on packaging and packaging waste

  Current targets (%) By 2025 (%) By 2030 (%)

All packaging 55 65 70
Plastic 25 50 55
Wood 15 25 30
Ferrous metals 50 (incl. Al) 70 80
Aluminium - 50 60
Glass 60 70 75
Paper and cardboard 60 75 85


Although the implementation of these rules was considered a success, the amount of packaging waste in the EU is still increasing and too much of our 'scarce' resources are wasted without being recycled.

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In this historical moment, the 'abundance' of raw materials available from the circular economy could be a concrete answer to various social, economic and environmental problems and solve the paradigm of logistics as a necessary and non-polluting resource. 

 



On this opportunity, the EU has developed a specific strategy called "Circular economy action plan", uone of the main building blocks of the European Green Dealthe new European agenda for sustainable growth. According to the document, the EU's transition to a circular economy will reduce pressure on natural resources and create sustainable growth and jobs. The development of the circular economy will also be a prerequisite for achieving the EU's 2050 climate neutrality target by limiting the loss of biodiversity.


LET'S FOCUS ON PALLETS

Seen individually, a pallet is a resource of little value and its importance is often overlooked, but when problems arise with its availability or price increases, it suddenly becomes a primary need. From the findings of the Annual Pallet Report 2021: Short Supply Meets High Demand it is clear that industry players are taking a more critical view of the impact of pallets on supply, production and distribution chains and a growing awareness of their indispensable role in efficient and timely operations management.

With this article, we want to analyse the factors that could have an impact on the pallet purchasing and procurement process, starting from the assumption that there are pallets in a variety of materials on the market, but wood and plastic pallets represent the largest share.
Pallet materiali più utilizzati
Source: Annual Pallet Report 2021: Short Supply Meets High Demand

PLASTIC AND WOODEN PALLETS: FUTURE SCENARIOS IN THE SUPPLY CHAIN

Before any further consideration, it is appropriate to make the right observations on what are the possible scenarios for the two product types, based for now on their “impact in the supply chain”. The factors that will be taken into consideration are:

  1. Cost (first purchase)
  2. Life-cycle costing (LCC) / Total lifetime cost of the product
  3. Availability
  4. Fields of application

1. COST (FIRST PURCHASE)

Since 2021 we are witnessing a generalised increase in the costs of all raw materials. Wood prices in particular have reached record levels for several reasons including:

  • sectors such as construction, have seen an increase in activity and demand
  • the economic recovery of the US and China
  • Beijing has a five-year plan 2021-2025 to increase the import of raw materials
  • the blockade of many containers in Asia and Great Britain
  • forced stoppage of lumberjacks in Italy as a result of restrictions in the DPCMs

Checking commodity price trends: PRICEPEDIA

2. LIFE-CYCLE COSTING (LCC) / TOTAL LIFETIME COST OF THE PRODUCT
In general, plastic offers a greater possibility of reuse than wood. The "one-piece" construction of plastic offers greater guarantees of durability, while wood generally supports higher loads. In addition, plastic can be washed and sanitised. Many plastic pallets are stackable, which enables them to reduce transport costs (volume occupied) by up to 60%, and thus the costs of each use cycle.

3. AVAILABILITY
We can assume that the production of plastic pallets (serial moulding) may be more favoured at this time by an industrial model with a higher production capacity (highly automated and 24-hour production processes) and a greater availability of raw material (quantity and variety).

4. FIELDS OF APPLICATION
Wooden and plastic pallets are very versatile solutions that are used in various sectors in logistics. In many cases, there are no specifications that clearly direct the choice towards one product or the other, while in other areas, such as international transport (see fumigation) and the transport of food and/or hygienic products, plastic pallets are the best and sometimes the only permitted solution.

CONCLUSIONS

The increase in costs and poor availability could be a phenomenon linked to external factors (pandemic, war, growth of the US and China, etc.), therefore temporary, but it could also be structural. Probably over time we will see a gradual growth in the market share of plastic pallets due to an increasingly efficient production system and the drive of the circular economy, particularly linked to the problem of recovering plastics in the market.

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