Kennedy: Lumber shortages impact pallet businesses

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Last month, trade groups representing U.S. produce growers put out stark warnings to members that aftershocks from the coronavirus pandemic were leading to a “crisis” in the supply of wooden pallets.

Lumber shortages emerged after logging and milling plants, operating at partial capacity due to pandemic protocols, ran head-on into increased demand from the construction industry as the economy reopened.

As a result, “The price of lumber has skyrocketed,” advised the National Watermelon Association. “The cost for both common and used pallets has increased dramatically, and the availability is hit-and-miss,” it told members.

In a similar letter, the United Fresh Produce Association suggested the shortage could last for the rest of the year. “The lack of pallets is adding stress to a supply chain that is already facing significant challenges” in transportation and labor constraints, it said.

Pallets, which date to the 1930s, first saw widespread use in World War II supply efforts. Today, 93 percent of material-handling companies use wooden pallets to move products along the supply chain, according to a study published last year in BioResources, a peer-reviewed journal at North Carolina State University. The study put production of new and recycled/remanufactured wooden pallets at more than 800 million in 2016.

The National Wooden Pallet & Container Association calculates the industry’s direct and indirect impact at 173,000 jobs and $31 billion in annual economic activity. In New York, where the comparable numbers are 2,500 jobs and $410 million in economic activity, the group lists 22 companies as members. 

Among them is Pallets Inc. in Fort Edward, a three-generation family business founded in 1942 that produces more than 100,000 pallets monthly.

President Clint Binley said he has seen pallet-grade woods double (hardwood) and triple (softwood) in price over the last six months. “So, yes, our business has been significantly impacted” by the jump in lumber prices.

Paying more, though, does not guarantee “that we will continue to receive the quantity, sizes and quality in a timely manner that we have been accustomed to,” he added.

The company’s continuous investment in equipment to process many different grades of lumber keeps costs down and provides a long-term competitive advantage, Binley said.

These days, however, “This does not mean that we don’t struggle daily – we do!” he wrote in an email, with the last two words in all capital letters.

Like other pallet producers, Pallets Inc. was an “essential” business that remained open during pandemic lockdowns, although Binley said COVID-19 had the workforce at just 60% at one point.

Asked to compare the effects of the pandemic to the Great Recession, Binley responded, “The Great Recession impacted businesses’ vitality and slowed things down. Today, I feel businesses are doing well, healthier, and are relatively very busy.”

But, he added, “What we are experiencing today is unprecedented … We are in uncharted waters and the storm is not over.”

Marlene Kennedy is a freelance columnist. Opinions expressed in her column are her own and not necessarily the newspaper’s. Reach her at marlenejkenne

Categories: Business

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