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18 Pallet C e nt ral • Ma rch -Ap r il 2 0 24 Hopefully, with more adversity on the front, innovative supply chain solutions that utilize artificial intelligence and predictive analytics can get ahead of whatever curveballs are thrown this year. For wooden pallet manufacturers, adaptation will be key. If there's a lull in supply chain activity, they should be ready for that lull to be followed by a panic-filled surge as businesses rush to get products to their end users. Spending Behavior Heightened consumer spending during the pandemic caused a myriad of economic challenges. Because people were doing less and had more money in their pockets, they were buying goods left and right. But now, with pesky inflation sticking around, whispers of a recession still stoking fears, and global tensions throwing international balance into question, it would make sense that consumers stop spending and start saving for a rainy day. On a recent investor call, Michael Gapen, Bank of America's head of US Economics showed hope, saying, "We see consumption growth remaining positive. at's two-thirds of GDP. at's what helps keep the economy out of a recession." If Gapen is right, and consumer spending can con nue growing— even if at a slower pace than last year— the wooden pallet industry will remain a key player in ge ng products to customers. However, although consumer spending isn't expected to go anywhere, lower levels of business and manufacturing spending will slow the economy down. Since some of the biggest sectors of wooden pallet users are businesses, this is a high-alert watch point for the industry. If fewer products are being manufactured, and fewer goods are flowing between businesses, wooden pallet usage will no doubt take a hit. Global Events And Trade By the end of this year, the World Bank predicts that the world will have seen the slowest half-decade of GDP growth in 30 years. is isn't good news by any means, but because the United States is facing lower risk levels regarding an all-out recession, the risk of a global recession is falling as well. However, continued tensions between Russia and Ukraine, rising global tensions regarding Israel and the Middle East, and global pressure on the ethics of trade between the West and Africa are creating one of the most complex global trade landscapes in history. Global trade growth in 2024 is expected to be half of what it was in the decade leading up to the pandemic. Poorer countries around the world will struggle to exit this stagnant period because of the high cost of borrowing money, climate events that impact those regions at a higher rate, and a reshuffle of global power dynamics. Wealthy countries will fare better than their struggling counterparts, but they won't be able to offset global economic downturns with the same strength that we've seen in the past. It seems as one challenge wanes, another— or ten—rears its head. If global production slips and trade goes down internationally, wooden pallet manufacturers will feel the pinch more than most industries. Innova on: Ar ficial Intelligence, Sustainability Trends, And The Compe ve Landscape With much of this article focusing on the challenges we're facing in the industry, it's important that we take time to point out the high points that we're seeing ahead. ese may not be the "light at the end of the tunnel," but they will help carry our industry through any upcoming periods of volatility, which seem to be the only thing we can be sure of. Innovation among wooden pallet manufacturers will see a boost in the usage of artificial intelligence (AI) and a further improvement in sustainability, differentiating the good from the great. Staying competitive in 2024 will require manufacturers to use technology like AI to better understand and serve their customers' needs. Can you solve a problem they've been facing for decades? Can an enhanced pallet product redefine their supply chain going into the second half of the decade? Doing things differently will require different tools, and at the top of that list, bringing AI into the fold goes beyond being a differentiating factor. It's a survival factor now. Although the wooden pallet manufacturing industry already boasts sustainability achievements such as climate positivity and a 95% recycle rate, enabling greener supply chains and imparting the same level of climate awareness to our business partners need to be key focal points moving forward. With the right level of innovation, we can meet the moment we're in. Mee ng The Moment Collectively, this industry proves time and time again that it can innovate, adapt, and recover, and 2024 will call on us to do all of those things and more. Just when industry leaders think we might get time to breathe, we're thrown another set of unique challenges. Upstream, we're sure to see an uptick in lumber prices as the housing market recovers, though it's not expected that lumber will reach peak pandemic prices anytime soon. As skilled labor continues to be a challenge, we'll need to rely on innovation to make up for any gaps. On the bright side, as interest rates start to level out and even decrease, doing business should be less costly. Looking at the demand for wooden pallets, we know that global events could slow down trade across the board. e hope is that consumer spending will remain strong enough to offset any usage reduction in the B2B sector. If the supply chain made it through 2020, 2021, 2022, and 2023 still intact, we're confident the same will happen in 2024. e volatility and ever-changing nature of the global economy make it hard for business leaders to strategically plan their maneuvers, but if the past few years have done anything, they strengthened our industry's ability to adapt quickly and work together in the face of adversity. 2024 will continue to test our resolve, but if any industry can handle what's to come, it's this one.

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