“The perceived bad patch of the industry wasn’t that bad,” commented Holliger. In Germany, there was even an increase of 4.5% in the production of EPAL pallets which reached 37.6 million pieces last year.
The number of repaired pallets, however, fell to 26.8 million pieces from 27.5 million pieces the year before. According to Holliger, this development is also the result of increasing unofficial repairs, of which he warned since quality is not guaranteed with those pallets.
EPAL counts on strong global growth. The focus is mainly on China, where a strategical partnership was established with the company JD. This giant company with its 330 million users and 65,000 delivery staff has one of the biggest infrastructures. There, EPAL pallets are to be used for exports as well as for transport inside China.
Marcus Kirschner, managing director of the German wood packaging, pallet and export packaging association (HPE), sees a discrepancy between German producers’ assessment of their actual business situation (always positive until December 2019) and their expectations which were rather pessimistic throughout the year.
2019 was off to an extremely positive start. After having celebrated the production record in 2018 (111 million pallets), production continued to increase in January and February. After a certain up and down in the months that followed, the fourth quarter again saw a decrease.
Krischner expects that German pallet production will amount to around 110 million pieces in 2019 and will thus see only a slight fall in quantity and value. This would mean a return to the very good level reached in 2017. “It is extremely difficult to make predictions about 2020,” Kirschner admitted at the Euroblock Kundenforum. The much feared plunge in the automotive sector resulted in a decrease of only 3% for the packaging sector (January to December 2019, year on year). In other sectors, such as metal production, the fall in demand reached double-digit percentages.
“GDP could grow by over 1% this year. We are not going to profit one-to-one from it since exports are unlikely to grow,” Kirschner expects. In part, the past successes, i.e. the doubling of production from 2000 to today, continued. In terms of quantity, demand could grow by another 50 to 60% in the coming years, according to current forecasts cited by Kirschner.
Poland is the second biggest producer of EPAL pallets in Europe after Germany. Jaroslaw Maciazek of EPAL Poland reported that the country processes 6 million m³ of softwood sawn timber a year. The packaging sector needs around 12 million m³ of the overall 40 million m³ which are harvested each year. Last year, Poland felt the negative effects of having less damaged wood than its neighboring countries. Contrary to the latter, Polish log prices rose by about 8% in 2019. “Pallet producers compensate for this competitive disadvantage with increasing imports of softwood sawn timber from Germany,” explained Maciazek regarding the changes which took place. Another trend is an increasing domestic demand for pallets due to Poland’s growing economy.
Maciazek was disappointed that the production of EPAL pallets grew by “only” 4% to 30 million pieces. Hopes for a 5% increase were disappointed. Nonetheless, with such a performance Poland produced about every third EPAL pallet in the world. Adding the 6 million pallets with the UIC logo and the 45 million single-use and other pallets, Poland produces 81 million pallets last year. This corresponds to a decrease of around one million pieces.
FEFPEB president Rob van Hoesel’s goal is that pallet producers are going to have their productions completely certified within two or three years. “We use 25% of the produced softwood sawn timber which often has one of the two certification logos. Now, it is necessary to close the circle ending with the customer,” Hoesel wished and also called on EPAL to follow this example.
John Dye of Timcon analyzed the British market on which there is a particular focus due to the Brexit in 2020. The percentage of ISPM15 treated pallets has been growing rapidly in the past years. Thus, this does not represent a big hurdle anymore. However, given the situation regarding damaged wood in Central Europe, Dye is worried about the competitivity of British producers. Competitors could “buy” market shares.
“In the US, 90% of all goods are transported using wood pallets,” reported Brent J. McClendon, president of the association NWPCA. This means that there are around 510 million new pallets every year or 850 million, if one includes the number of repaired pallets. In the US, the focus is on “complete individualization, which is why the percentage of standardized pallets amounts to only about a third. Service and solution-orientation are the main focal points for customer-oriented and individual packaging solutions – the price is secondary,” he explained the current market situation.
Down to earth after a record year
On 30 and 31st January, more than 200 leading representatives of the packaging industry followed Eurblock’s invitation and met in Freising near Munich in order to discuss the challenges for the sector and attend first-rate speeches and market talks. Apart from the economic development after the record year 2018, the 11th Kundenforum focused on topics such as digitalization, availability of wood and climate change.
Euroblock Forum is the biggest industry event of the European pallet industry. As a market leader in the production of pallet blocks, Euroblock Verpackungsholz GmbH invites the industry to this two-day event every three years. This year, particularly renowned speakers participated and presented a broad range of current topics. For the first time, the event could boast a professional host. TV journalist Saskia Naumann charmingly guided the 210 participants from 16 countries in Europe, Asia and the US through the program. Euroblock’s customers and business partners as well as representatives of various associations followed the contributions with great interest.
At the forum, the economic situation has dampened optimism. After three years of dynamic growth with a record level reached in 2018, demand for wood packaging normalized lately.
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