When It Comes to Plastic Pallets, Buyers Have the Edge

Plastic pallets have a buyer power score of 3.9 out of 5, reflecting high buyer power, according to a new report.

“Because plastic pallets have a low level of specialization and low switching costs, buyers are able to attain stronger negotiation power,” says IBISWorld procurement analyst Lauren Setar.

Additionally, substitutes for these products, such as wood pallets and used plastic pallets, are easily attainable, which benefits buyer purchasing power. However, many buyers have turned to plastic pallets in recent years due to heightened environmental awareness and plastic pallets’ longer useful life, bacteria-resistant nature and ease of radio frequency identification tracking.

Buyers of plastic pallets also have strong buyer power due to the lack of a dominant players in the market. With the low level of market share concentration, buyers can look among a wide range of suppliers for the best price. “Thus, buyers can easily compare plastic pallet prices and features before making a purchase,” says Setar. The large number of suppliers also gives buyers the ability to switch suppliers relatively easily. There are no upfront costs associated with changing suppliers, but a buyer should be aware of the time necessary to find a new supplier that meets requirements and of the risk of new supplier performance. Major suppliers include Greystone Logistics LLC, Schoeller Allibert Ltd., Uline and US Plastic Corp.

Although buyers have overall negotiation power, buyer power is somewhat limited by the costs associated with inputs into plastic pallet production. Plastic materials and resin make up the largest component of plastic pallets and are tied to volatility in crude oil prices. In many cases, the supplier will pass these price fluctuations on to the buyer in the form of higher prices. Other times, plastic pallet suppliers will absorb the additional production cost and shrink profit margins. Therefore, because buyers have less negotiation room with suppliers, buyer power is limited.

This report is intended to assist buyers of plastic pallets.  It does not include wood pallets or used plastic pallets. Although some plastic pallet suppliers may provide pooling services or pallet management services, these services are not included in the plastic pallet market or in the procurement of plastic pallets. Report components include:

  • Executive Summary
  • Pricing Environment
  • Price Fundamentals
  • Benchmark Price
  • Pricing Model
  • Price Drivers
  • Recent Price Trend
  • Price Forecast
  • Product Characteristics
  • Product Life Cycle
  • Total Cost of Ownership
  • Product Specialization
  • Substitute Goods
  • Regulation
  • Quality Control
  • Supply Chain & Vendors
  • Supply Chain Dynamics
  • Supply Chain Risk
  • Imports
  • Competitive Environment
  • Market Share Concentration
  • Vendor Financial Benchmarks
  • Switching Costs
  • Purchasing Process
  • Buying Basics
  • Buying Lead Time
  • Selection Process
  • Key RFP Elements
  • Negotiation Questions
  • Buyer Power Factors
  • Key Statistics

About IBISWorld Inc.
IBISWorld is one of the world’s leading publishers of business intelligence, specializing in Industry research and Procurement research. Since 1971, IBISWorld has provided thoroughly researched, accurate and current business information. With an extensive online portfolio, valued for its depth and scope, IBISWorld’s procurement research reports equip clients with the insight necessary to make better purchasing decisions, faster. Headquartered in Los Angeles, IBISWorld Procurement serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com.

Source: IBISWorld Inc.

Read reader comments about this article here.


  1. Michel Trapp says:

    Hi Rick,
    It is very rare that I comment on your excellent articles but these analyst’s comments are the  most stupid things I have heard in a long time about plastic pallets . Being one of the pioneers in introducing plastic pallets in a large scale in the returnable industry, I just couldn’t  ignore such lack of Industry understanding….
    – ” Pallets have a low level of specialisation and switching costs…” . This may be true for cheaper one-way pallets but otherwise, as you know, returnable plastic pallets have a high degree of specialisation and require an educated customer, modifications in production lines, pallets designed for  specific applications (glass, metal and   plastic food and beverage containers, filled goods and dairy pallets, hygienic pallets in Europe, post office pallets, etc), operator training, etc. to take full advantage of the plastic pallets benefits. However, the low level of knowledge and sophistication of buyers makes it dificult for pallets to be sold on their technical merits and specificity of the application. most buyers who buy on price alone end up having problems in their production lines, warehousing and logistic chains.
    – ” Lack of dominant players…. ” Again this may be true for cheap one-way where anybody who injects plastic parts thinks he can make plastic pallets but on the returnable market there are only a few dominant players with the technical and testing resources needed for high tripage for closed and open pools, rackable pallets for automated warehousing, etc. In Europe, SAH and Cabka-IPS lead the pack in the general purpose and specialty pallets. Craemer and UTZ are strong in specialty niches. The US returnable packaging is nated by ORBIS and Rehrig. DIC leads the Japanese market.

    Let me know if  am being to harsh on Lauren but some more experience should help junior analysts !



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