A general meeting of the Timber Packaging & Pallet Confederation (TIMCON) saw a record turnout last month, as members of the sector and the wider forest-based industry gathered to discuss unprecedented shortages of timber.
The Manchester event heard of the “serious challenges” affecting availability of timber, particularly of the smaller logs required by the pallet and packaging sector, with discussions between manufacturers, sawmillers and other related industry partners.
The programme for the meeting examined availability in the UK, as well as at the European and global scale. This included presentations by Andrew Heald, technical director of CONFOR, on UK timber supply; Hikki Vidgren of Pőyry Consulting on global timber flows; and Guy Watt of John Clegg Consulting on the UK pallet and packaging market. This was followed by an open forum discussion for members. (Story continues below)
Causes of the UK’s Current Lumber Shortage
- High demand globally.
- High demand from China.
- Scandinavian timber flowing to construction in the US market.
- An unfavourable exchange rate caused by Brexit.
- Baltic supplies down.
- Good UK demand.
- Subsidised biomass industry buying up small logs the packaging and pallet industry uses.
- Weather, which has affected the harvesting of home-grown timber.
John Dye, TIMCON president, said: “The record numbers who attended last month’s general meeting illustrates the severity of the situation in which the timber packaging and pallet business currently finds itself. Fortunately, as a part of the wider forest-based industry, we have strong allies with whom we are sharing information and developing coordinated responses and solutions to the current challenges.
“Timber remains the most sustainable and economic choice of material, not only for pallets and packaging but also an increasing number of consumer and industrial goods.”
Guy Watt presented the results of TIMCON’s latest UK Wood Pallet & Packaging Market report, which showed an overview of the industry for 2016.
He said an estimated 42.5 million new pallets were produced in 2016, up 5.6% compared with 2015; in the same period, an estimated 41.4 million pallets were repaired, up 6.2% on 2015. Total UK turnover from manufacturing pallets was £268.1 million; while turnover for repairing pallets was £90.2m.
TIMCON members who completed the annual survey said they expected an increase in turnover in the year ahead, a reflection mainly of increasing timber prices.
In a presentation on the challenges and opportunities in UK domestic timber supply, CONFOR’s Andrew Heald said the market is experiencing the highest prices for 20 years. There is an estimated shortfall of 5-10%; the shortage appears to be most acute in southern Scotland and northern England.
Communication within and by the forest sector was key, he said, adding that CONFOR had met with the Forestry Commission and politicians recently, with timber supply at the top of the agenda.
Long-term supply contracts between Forest Enterprise and sawmills were a promising development, he said, and similar arrangements with the private sector could work well to secure supplies into the future. Vertical integration between sawmilling and forest management companies is also a positive trend.
He concluded by saying that ongoing coverage of the pricing issue meant in Scotland new plantings of timber have begun to climb again – by as much as 9,000 hectares a year; a trend he hoped would spread to England as well.
Stuart Hex, general secretary of TIMCON, said: “Recent Pőyry data shows a significant increase in the price of timber. The Markit/CIPS report released at the beginning of March also shows pallet timber has increased in price for the 20th consecutive month. Meanwhile, anecdotal evidence from the pallet and packaging industry suggests the availability of smaller logs is extremely tight.
“The open forum at TIMCON’s general meeting was an essential exchange of industry views on the current situation. There was a consensus that there is sufficient timber supply to service the market, but that we may have to adjust to structural pricing changes to ensure these short-term issues are overcome.”