Why are plastic pallet prices skyrocketing in 2021?

If you’ve been trying to source plastic pallets in 2021, you already know it ain’t pretty. The reality right now is that prices are on a steep trajectory. And, it may be some time yet before we see any relief.

What gives? If you’re pointing the finger at COVID-19 (and who isn't), you’re part way there. Let's take a look at more factors contributing to this chaotic ride.

Market prices for polymer resin used in manufacturing plastic pallets continue to increase due to strains within the global supply chain.

Plastic Supply Chain Disruptors

We've never seen a plastic market like this before. The raw materials required to make plastic pallets including polypropylene (PP) and polyethylene (PE) are in short supply. The market is so tight right now that factories are starting to slow production or completely shut down if their product relies on plastic.

Here are the top culprits for rising prices:
  

1. The Pandemic
   When the world went into lockdown, production stopped in nearly every industry and supplies dwindled. Getting factory lines up and running again proved to be costly and difficult to navigate in a post-covid world. Beyond staffing and PPE shortages, freight issues added to the headache. The transportation industry is still facing its own crisis and increased costs for moving goods from place to place in wake of the virus.
   
   
2. Two Gulf Coast Storms
   Most recently, Texas was hit by an icy winter storm and power outages that brought portions of the state to a grinding halt. Guess where much of the raw materials for plastic comes from. Bingo... the state's gulf coast petrochemical facilities. Six months prior, Hurricane Laura shut down petrochemical production in both Texas and Louisiana. Double whammy. Ouch.
     
3. Consumer Demand
   Plastic is everywhere. Think about it. The car you drive. The phone in your hand. That bottle of pop chilling in your fridge. And, of course, the plastic pallets and crates that deliver parts and finished products. Manufacturers that normally don't compete against each other are suddenly impacted by the same raw material shortage. Some even hit pause on production to give way to the more critical manufacturing of medical and sanitation products. Things like masks, gowns, hand sanitizer, cleaning products and more all rely on the plastic supply.
     
4. The Suez Canal Fiasco
   Yep, that backlog of 400+ stranded ships in one of the world's busiest waterways is another factor. A few short weeks ago, a single ship ran aground in the canal and upended supply chains. The result is delayed shipments and longer lead times including petroleum products and petrochemicals. While Europe may be more impacted by this event, a ripple effect is already finding its way to the US. 

So now what?

Talk with your pallet supplier to develop a plan. Prepare for possible delays and future increases in price. If your system has room for flexibility, alternative pallet types or sizes may help bridge the gap until we see the market return to normal.

What impacts are you feeling the most in this plastic pallet market? Tell us in the comments below.

Post by: Mike Cunneen, Director of Sales & Marketing