Peak Pallet

Prices for a warehouse staple are at a record, buoyed by the boom in e-commerce

- Brendan Murray

After carrying the weight of the global economy since World War II with little fanfare, the lowly shipping pallet is finally commanding some respect.

Demand for the platforms used to haul consumer goods and industrial materials is soaring amid a surge in e-commerce, forcing retailers and manufacturers to expand warehouses or pile inventories higher. At the same time, two key production inputs—cheap lumber and low-wage labor—are scarce, and even nail costs are rising.

The result: Pallet prices have hit record highs, according to a U.S. Labor Department index, while European gauges show big jumps from the U.K. to Germany. The market may stay hot through the peak home construction season in the springtime and as Covid-19 vaccines help revive restaurants and event venues—adding to inflationary pressures rippling across supply chains. “Supply is just barely keeping up with demand,” says Howe Wallace, chairman and chief executive officer of PalletOne Inc., a producer based in Bartow, Fla., with facilities across the Southeast. “It’s a pretty dicey situation.”

Pallets serve as the base of a so-called unit load, a standard way to ship products so they’re easy to move with forklifts and jacks. They’re generally bought or leased by manufacturers and get baked into transport packaging costs. When a retailer or other end user is finished with pallets, recycling companies collect, repair, and resell them. Some industries, such as bottling companies, manage their own pallet pools.