Pallet shortages occur when demand for pallets outruns the pallet industry's ability to source lumber and build or repair units. The most severe recent episodes came in 2021, when pandemic-era freight demand and soaring lumber prices collided, and in 2022, when the war in Ukraine and sanctions removed a significant part of Europe's timber and pallet supply. Both episodes showed how dependent global logistics is on a low-tech product.
What a shortage looks like
A shortage is rarely a total absence of pallets. In practice it appears as longer lead times, price increases, suppliers rationing customers, lower quality accepted at exchange points, and delayed shipments because goods cannot be unitized. Buyers who relied on spot purchases suffered most; those with contracts, own stock or pooled fleets fared better.
The 2021 shortage: demand and lumber
During 2020 and 2021 e-commerce, food retail and consumer goods shipments surged while sawmills and pallet plants faced labor constraints, transport bottlenecks and, in North America, a historic spike in lumber prices. Pallet producers compete with construction for the same sawn boards, so a building boom raises the cost of pallet lumber almost immediately. A pallet that needed a few dollars of wood in normal times became much more expensive, and buyers often could not wait for supplies.
Precise price statistics differ by region and source and are not reproduced here. What is documented is the pattern: the wood shortage of 2021 was already a precedent that EPAL cited when the 2022 supply crisis began.
The 2022 shortage: Ukraine, Russia and Belarus
Before 2022, Europe relied on Eastern Europe for a large share of its raw material and finished pallets. Euronews reported in April 2022 that Europe obtained about 25% of the timber used in its pallet industry from Ukraine, Russia and Belarus combined; that Ukraine alone produced an estimated 15 million pallets a year; and that Russia and Belarus exported about 20 million pallets to Europe. These were estimates quoted by industry figures in a news report, not official statistics.
Once war began and sanctions were imposed on Russian and Belarusian goods, much of that supply disappeared, and Ukrainian exports of packaging wood almost halted, as EPAL itself noted. The effects:
- Timber prices. Euronews cited wood for pallets rising from about €150 per cubic meter before the pandemic to about €450 in March 2022.
- Euro pallet prices. The same report put a standard Euro pallet at around €23, against about €9 in late 2020.
- Nails. A secondary bottleneck was fasteners, since a pallet needs roughly 70 to 80 nails and part of the steel wire used by eastern European nail makers had come from Russia.
- Most exposed markets. Germany, Italy and the Netherlands were described as particularly affected because of their reliance on imports.
Even in that disruption, the open exchange system remained in use. EPAL reported record growth of 7.55% for Euro pallets in 2022 compared with 2021.
Why the pallet supply chain is fragile
Several structural features explain the vulnerability:
- Low inventories. Pallets are produced close to demand, and plants hold little stock.
- Commodity input. Lumber is traded globally, and a shock in one region affects every other.
- Competition with other sectors. Construction, furniture and bioenergy use the same wood.
- Few substitutes. Plastic and other materials cannot replace millions of wooden pallets quickly, and they cost more; see wood vs plastic pallets.
- Loss and poor tracking. Pallets leave the supply chain through loss and neglect; see pallet loss and asset control.
Mitigation strategies
Companies that coped well generally combined several measures:
| Measure | How it helps |
|---|---|
| Framework contracts with volume commitments | Secures supply and moderates spot-price exposure |
| Greater reuse and repair | Reduces new-pallet demand; see pallet repair |
| Diversified suppliers and regions | Lowers dependence on one source |
| Pallet pooling or rental | Shifts fleet management to a specialist; see pallet pooling explained |
| Design optimization | Fewer boards or less wood per pallet where load allows; see custom pallet design |
| Better tracking | Reduces loss and speeds return; see pallet tracking and IoT |
| Alternative materials for specific lanes | Plastic or presswood for closed loops, one-way flows |
Specifications also matter. Accepting mixed species, or equivalent quality from different regions, widens supply. EPAL stressed in 2022 that higher purchase prices are offset by reuse, exchange, resale and repair.
Signs that a shortage is developing
Buyers can watch for early warnings before supply tightens. Sawn-timber prices rising for several consecutive months, supplier lead times stretching from days to weeks, suppliers asking for volume commitments or shorter price validity, and exchange partners accepting only higher grades are all typical signals. Falling stocks at pallet recyclers show that used pallets are being drawn down as well.
A simple response is to hold a safety stock of pallets sized to the lead time, to agree quarterly forecasts with suppliers, and to define in advance which substitute specifications are acceptable, for example a different species or a slightly different board count, so that production does not stop when the preferred pallet is unavailable.
Lessons for buyers and producers
For buyers, the main lesson is that pallets are a strategic input and deserve procurement attention: know your pallet count, plan for peaks, qualify more than one supplier and keep a reserve. For producers, secure timber early, document origin to comply with regulations such as the EU deforestation regulation, and invest in repair and automation capacity.
Frequently asked questions
What caused the 2021 pallet shortage?
Surging freight demand, labor and transport bottlenecks and sharply higher lumber prices, especially in North America, all hit pallet producers at the same time.
How did the war in Ukraine affect pallets?
It removed Ukrainian exports and, through sanctions, much Russian and Belarusian timber and pallet supply from Europe, raising timber and pallet prices in 2022.
Are pallet shortages over?
Supply normalized after the 2021-2022 peaks, but the structural vulnerabilities remain, and a new spike in lumber, energy or freight demand could again tighten the market.
Can plastic pallets solve a wood shortage?
Only partly. Plastic pallets cost more, cannot be repaired as easily and are practical mainly in closed loops where they are tracked and returned.
Sources
- The Ukraine war is hurting Europe's pallet supply — Euronews
- War in Ukraine puts pressure on pallet market — Packaging Journal
- Ukraine invasion drives timber prices up and pallet supply down — METRO
- Annual pallet estimates viewpoint — Fastmarkets