palletcentral

Pallet C e nt ral • Ma rch -Ap r il 2 0 24 17 just above $550 per thousand board feet, a much more amenable number than the $1,500 price tag that came along with this critical raw material in 2021. All of 2023, the price of lumber hovered around $450–$550 per thousand board feet, resulting in a fairly stable price reality for lumber buyers. However, looking to 2024, the stability isn't expected to last, and we have one thing to thank: the housing market. Currently, there are more home buyers on the hunt than homes for sale, creating a very tricky housing market. Constant interest rate increases through 2022 and 2023 cooled the market slowly. With housing rates sitting at more than 7%, many buyers are taking a couple of steps backward before jumping into mortgages. e Fed has signaled three potential rate cuts in 2024, which will likely bring the housing demand back to overwhelming levels. More houses mean more demand for lumber, and that spells trouble for lumber prices. In turn, wooden pallet manufacturers should get ready for heightened expenses next year. Labor Shortages Won't Quit Skilled trade workers have been in high demand for years. Technical manufacturing roles and logistics positions have both been hit hard by labor shortages that never really recovered after the pandemic. We don't expect staffing challenges to curb anytime soon. Unemployment numbers are still sitting at record lows—about 3.7%—so any shortages that exist today likely won't be filled in the coming year. To offset labor challenges, manufacturers will need to turn to new technologies and innovations. Machines and artificial intelligence taking on some of the manufacturing workloads are bright spots as we look ahead. Down For The Count? Interest Rates May Start Descending As mentioned, the Federal Reserve has not only stopped raising interest rates every quarter but it has actually hinted at a multi-level decrease in 2024. Higher interest rates were meant to cool inflation and slow the economy down, and since that seemed to work in 2023, lower rates this year are likely. Lower interest rates make it a lot easier to do business. ey enable affordable loans, allow businesses to invest in innovation, and boost consumer spending. All of these changes are incredibly good news for pallet manufacturers. Downstream Factors: Supply Chain Revival, Consumer Spending, And Global Trade Wooden pallets asserted their dominance in supply chains and logistics workflows since the very start, but now, they have become integral in nearly every business transaction around the world. With critical economic factors expected in 2024, the demand for wooden pallets won't wane, and instead, we're likely to see an increase in the need for them. As the global supply chain shakes off lingering COVID disruptions, we'll need to understand if any other headwinds will have an impact this year. If interest rates reduce slightly and inflation continues its downward trend, will consumer spending spike? Remember, more spending means more product demand, higher levels of production, and, of course, more items that are being transported around the world for consumers. Finally, there are a number of global events that could impact trade. Will these events be material enough to ease demand? Let's take a look at all of the above considerations in detail. Supply Chain Expecta ons As many companies switched from a " just-in-time" inventory approach to a " just-in-case" approach following the supply chain complications and dangerously low levels of stock during the height of COVID, hoarding inventory has become more of the norm. Although keeping higher levels of inventory on hand is challenging with high interest rates, the pendulum swinging the opposite way after a period of risk is normal in business. Looking into 2024, businesses may cut back on keeping this much inventory on hand. With supply chain activity holding steady most of 2023, confidence in the system is being restored. However, heading into the year, two of the largest trade routes, the Suez Canal and the Panama Canal, are facing trade disruptions and backlogs. As we've learned in the past, losing productivity in just one trade corridor can have a domino effect on trade around the world. Pallet C e nt ral • Ma rch -Ap r il 2 0 24 17 "However, heading into the year, two of the largest trade routes, the Suez Canal and the Panama Canal, are facing trade disrup ons and backlogs. As we've learned in the past, losing produc vity in just one trade corridor can have a domino effect on trade around the world."

• Cover