The announcement by UFP Industries (UFPI) – a leading supplier of building materials and pressure-treated lumber – that it will purchase PalletOne is not only a way for UFPI to bolster its existing product portfolio, but also to enter in a new market segment that has shown growth during the COVID-19 pandemic – pallets.
PalletOne manufactures wooden crates and industrial packaging products, and also pressure-treats wood lumber, helping to mitigate degradation caused by exposure to the elements. UFPI also makes industrial lumber products, so the purchase of PalletOne will boost its capacities in that market segments.
It is PalletOne’s important role in the new pallet segment that is the key component of this transaction, though. Traditionally, only a few products (such as pharmaceuticals) were shipped on new pallets, with reclaimed pallets – pallets which have been used multiple times – accounting for the vast majority of trips. However, the COVID-19 pandemic has spurred demand for new pallets. Those involved across the supply chain – such as manufacturers, shippers and warehousers, and retailers – have identified used pallets as a potential source of COVID-19 infection. While the risk of transmission is low, used pallets are frequently handled as products are unloaded from and loaded onto them.
In contrast, new pallets – such as those made by PalletOne – see much less use and thus are seen as a safer alternative to reclaimed pallets. Even as the COVID-19 pandemic recedes and more people are vaccinated, it is expected that (as with so many other things) people will be reluctant to go back to the old ways of handling products, and will continue to specify new pallets when shipping items as food and consumer goods.
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.