US & Global Economic Impact Analysis and Forecasts

Freedonia analysts and economists are sharing their insights on how major events are impacting different parts of the US and global economies.

Strong Pallet Market Buffeted by Supply Chain Crises

The recent blockage – albeit temporary – of the Suez Canal demonstrated how tenuous the global supply can be, threating shipments of thousands of items worldwide. However, another item is as critical to the global economy as a giant freighter – and equally in peril: the humble pallet. Demand for pallets has risen over the past year as shipments of construction materials and numerous industrial products have remained strong, even during the COVID-19 pandemic. Furthermore, as more and more consumers shop from home, pallets are in demand to handle the vast number of packages shipped to and from warehouses and distribution centers.

However, as a recent article demonstrates, the swelling market for pallets is threatened by a series of challenges:

  • Surging lumber prices and a shortage of available lumber stock have made it difficult for wood pallet manufacturers to obtain the main raw material for their products.
  • Increasing nail prices – more than 100 can be used to assemble each pallet – have further driven up pallet costs.
  • Labor shortages – from workers needed to assemble pallets to the truckers needed to transport them to manufacturers and shippers – have producers scrambling to find employees to assemble and repair pallets and deliver them to customers.

While wood pallets will remain the leading pallet material going forward, rising costs and a lack of supply may encourages to use plastic pallets. Though more expensive, pallets made from plastic offer end users a number of advantages, such as lighter weight and the ability to be used for many trips before requiring repair or replacement. More importantly for suppliers, plastic pallets are more readily available than those made from wood.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, including Pallets and Global Pallets. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Automotive & Transport      Covid-19      Industrial Components    

Boosted by Pandemic-Era Trends, Germany Registers Record Breaking E-Bike Sales in 2020; An Opening for the US Market Too?

The highly competitive German e-bike market – the second largest worldwide behind China – turned in a record breaking performance in 2020. Despite the severe economic impact of the COVID-19 pandemic, the Zweirad-Industrie-Verband (ZIV) reports that sales of e-bikes grew 43% in 2020 to reach 2.0 million units.

The 2020 performance represents an acceleration of a trend that has been occurring for a decade: German riders of conventional bicycles and some internal combustion engine scooters and mopeds are moving to e-bikes. Consumers are attracted by the superior performance and greater convenience compared to bicycles, as well as the fact that e-bikes cost less than mopeds and scooters. Over time, the performance gap between e-bikes and mopeds and scooters has also shrunk as high-end and specialty e-bikes developed for Germany.

The COVID-19 pandemic led to the implementation of restrictions on both businesses and people. Use of public transportation decreased sharply and other modes of transport were also became less appealing (e.g., ride-sharing, taxis). In addition, consumers increasingly looked for new forms of recreation following the closures of many bars, restaurants, clubs, and similar businesses.

The 2020 spike in e-bike sales will have a long-term impact on the German market because many new e-bikes users are likely to continue to participate in the activity for many years. E-bikes in particular are well suited for older riders because of their light weight and ease of use. German consumers generally prefer high-performance models and, as consumer awareness grows, technological innovation will accelerate.

Some of these same trends have held true in the US market, presenting opportunities here as well. For instance, 38% of respondents to The Freedonia Group National Online Consumer Survey (conducted February – March 2021) noted that they were using public transportation less because of the coronavirus pandemic and 31% noted that they were using taxi and ride-share services less because of the pandemic. Though some of these reductions may have been due to reductions in overall travel and commute time, such trends present an opening for other types of transportation to take root, particularly low-cost options for shorter trips.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, particularly Global E-Bikes, Global Motorcycles, and Global Motorcycle Lubricants. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Automotive & Transport      Consumer Goods      Covid-19    

Forklift Market in North America Weathers COVID-19 Storm

The Industrial Truck Association noted that although forklift sales in North America were down 5.1% from the strong 2019 figure, the forklift segment of the materials handling equipment market still exceeded expectations in 2020.

The COVID-19 pandemic had a major impact on North America’s manufacturing, trade and distribution, construction, and mining sectors A wide range of companies greatly reduced spending on forklifts and other material handling equipment as economic conditions deteriorated, restrictions on businesses were put in place, and international trade declined during 2020. In the face of changing economic activity, industrial enterprises, warehouses, construction firms, and other operators delayed strategic investments and the opening of new facilities, further reducing North America’s forklift needs.

On the other hand, forklifts are essential for the standard operations of many companies, so the region’s replacement needs moderated losses. In some cases, the pandemic provided opportunities to suppliers of fork lifts and other material handling equipment:

  • The onset of the COVID-19 pandemic boosted demand for a variety of goods sold via e-commerce. To meet that need, Amazon and other companies added warehouse and fulfillment spaces, which required the purchase of new forklifts and related equipment.
  • The vaccination campaign resulted in the construction of new specialty warehouses and the purchase of additional forklifts in order to facilitate the transportation of vaccines at a variety of sites.

The Industrial Truck Association notes that the material handling industry is poised for a strong 2021 having weathered the COVID-19 storm.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, particularly Global Materials Handling Equipment and Global E-Commerce. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Covid-19      Machinery & Equipment    

Pandemic-Era Home Cooking: Consumers Are Searching for Convenience & Ways To Stretch Food Budget; Some Answers Lie in Packaging

As 76% of respondents to The Freedonia Group National Online Consumer Survey (conducted February – March 2021) noted, people are still less likely to be eating in a restaurant because of the coronavirus pandemic. That means that we are still mostly cooking at home. After a year of doing more home cooking than normal, a lot of consumers are looking for short cuts…anything that makes preparing a meal, especially if it is a new food option, easier.

Similarly, the pandemic era also has changed how we think about food waste. For instance, 59% of respondents to the same survey noted that they were more conscious of not wasting food because of the coronavirus pandemic. Factors include:

  • Consumers seeing their budgets tighten and wanting to watch their food spending – 38% of respondents to this recent survey noted that they still have reduced work hours (voluntarily or involuntarily) and 56% of respondents noted that they were still cutting back on spending because of the pandemic.
  • Consumers wanting to minimize trips to the stores – 54% of respondents on this recent survey noted they were still spending less time shopping in brick-and-mortar stores because of the pandemic.

This presents opportunities for packaged food companies and for packaging companies, including:

  • Convenient preparation: 54% of respondents to the November – December edition of the survey indicated that microwave cook-in packaging was a high or medium priority when shopping for food. Microwaveable pouches allow home cooks to quickly add elements such as rice, quinoa, pasta, beans, and tuna to a dish as an ingredient or as a standalone part of a meal.
  • Food protection: 76% of respondents to the November – December edition of the survey indicated that packaging that extends shelf life was a high or medium priority when shopping for food. Such packaging not only allows customers to stretch their food budget by limiting waste, but it also allows food products to travel in e-commerce channels which have become increasingly popular during the pandemic.  

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, including the packaging category with titles such as Pouches and Frozen Food Packaging. Related food and beverage industry analysis from our sister publisher, Packaged Facts, include Home Baking: US Market Trends & Opportunities, US Food Market Outlook 2020: Home Cooking, Grocery Shopping & Food Trends in the Age of Coronavirus, Global Food E-Commerce, and Online Grocery in the US. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Covid-19      Food & Beverage      Packaging    

A Legacy of the COVID-19 Pandemic: Vacant Commercial Space

In a recent tracker, we discussed how Google is planning to build more offices and data centers in expectation of its employees returning to work at the office. This was noted as an anomaly, as many companies were planning on reducing their office footprints in expectation that more and more work would be done from home.

A pair of recent articles illustrate how pervasive this notion is, and how it offers a challenge to the construction industry.

The first article noted that many large firms were planning to sublease their unused space or, if possible, not renew their rental arrangements – putting millions of square feet of office space on to the market. While a potential boon to smaller firms or startups looking for inexpensive office space, the prospect of numerous office buildings and commercial parks with floors of empty space is daunting to owners and managers of these properties.

The second article showed that the US restaurant industry is also facing an issue of empty buildings, reporting that more than 10% of all US restaurants have closed permanently. While in some ways this is not as dire as was expected (some reports had 25% of all US restaurants closing), this is still grim news for many parties – restaurant employees, communities that relied on these businesses for tax revenues, and suppliers of food, beverages, and relative supplies.

The construction industry also faces a number of challenges in dealing with this glut of empty commercial real estate. Construction of new office buildings and restaurants will undoubtedly lag going forward, as there will be little need to erect new sites when thousands of inexpensive properties are available for rent or purchase. This will affect demand for a wide range of building materials and related products, such as plumbing fixtures and fittings. Furthermore, while many of these buildings will require some refurbishment when they are repurposed, most will have far less wear and tear than those were permanently. Thus, less of such materials as drywall, paint, and related items will be needed to get buildings back into working shape.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, particularly in the Construction and Building Products and Consumer Goods areas. Related Freedonia Focus Reports include Real Estate: United States and Office Furniture: United States. Freedonia Custom Research is also available for questions requiring tailored market intelligence.