Plastic Pallet Market

Market Overview

The global plastic pallets market was estimated at USD 7,052 million in 2021, and it is expected to reach USD 11,406 million by 2030, growing at a CAGR of 5.4% during the forecast period (2022–2030).

Plastic pallets are rigid structures that keep goods stable during transportation or storage. They are a vital tool in the supply chain and logistics industries. Plastic pallets have numerous advantages over pallets made of other materials. Today around 90% of pallets are manufactured with recycled plastic. The most used recycled plastic is high-density polyethylene. On the other hand, some manufacturers used post-industrial scrap, including rubber, silicates, and polypropylene.

A pallet is a mobile horizontal rigid structure used as a foundation for assembling, stacking, storing, handling, and transporting goods. A unit load is placed on top of the pallet base, secured with shrink wrap, stretch wrap, adhesive, strapping, a pallet collar, or another means of stabilization.

Market Dynamics

Global Plastic Pallet Market Driver

• Rising Demand to Lower the Overall Weight of Bulk Packaging

The weight of the consignment or shipment during the transportation is essential in determining the final product's cost. It is common to find that the product's transportation cost exceeds its production cost, reducing the overall profit margin. The weight of plastic pallets is significantly lower than that of wooden or metal pallets, which is expected to entice end-user companies to use plastic pallets.

The weight of a container or packaging used by a company to transport materials or products is referred to as its deadweight. More packaging weight equates to higher transportation costs, which is a constraint for manufacturers. This is expected to increase demand for low-weight packaging materials to reduce deadweight and improve material handling and transportation efficiency.

A standard-sized wood pallet weighs around 80 pounds, while a comparable-sized plastic pallet weighs less than 50 pounds. Corrugated cardboard pallets are much lighter but not suitable for heavy loads due to their low strength. The high weight of the pallet leads to high transportation costs in reverse logistics. As a result, companies prefer low-weight pallets such as plastic and corrugated boards. Plastic pallets are more accessible and less expensive to handle than wooden pallets due to their lighter weight. Therefore, the increasing focus of end-use companies on reducing overall packaging weight is expected to benefit the growth of the plastic pallets market in the coming years.

Global Plastic Pallet Market Restraint

• High Product Cost and Sustainability Issues

The demand for plastic pallets from end-use industries is increasing significantly; however, several factors, such as the high cost of plastic pallets and their sustainability issues, limit their widespread adoption. Wood pallets are approximately 33% less expensive than plastic pallets. A new 48 "*40" GMA pallet costs around USD 8–10 in the United States, whereas a recycled 48 "*40" pallet costs around USD 4 to USD 5. On the other hand, similar-sized reusable plastic pallets range from USD 20 to USD 25. Plastic pallets are made from petroleum-based plastic resins like HDPE, P.P., LDPE, and others, whereas wood pallets are made from significantly less expensive softwood lumber.

Furthermore, since wood pallets do not require expensive tooling, the less complex manufacturing process lowers the cost of wooden pallets. Plastic pallet manufacturing necessitates mechanical pallet design and an injection molding process that necessitates costly tooling, raising the overall price of the end product. For open-loop or export applications where the pallet is non-returnable, end-use companies prefer low-cost pallets such as wood pallets over plastic pallets.

The sustainability of plastic pallets is another major impediment to market growth. The product's raw materials are non-renewable and non-biodegradable. Although many manufacturers are producing recycled plastic pallets, end-user companies prefer pallets made from virgin plastic resins to avoid contamination in particular food and pharmaceutical applications. Companies worldwide are increasingly implementing sustainable packaging practices due to tightening regulations and rising consumer sustainability awareness. As a result, the inability of plastic pallets to biodegrade is expected to limit their demand in the coming years.

Global Plastic Pallet Market Opportunities

• Expanding End-Use Industries

Plastic pallets are primary for end-use industries in food and pharmaceutical. Sanitation and safety are top priorities in both sectors, so plastic pallets increasingly replace wooden pallets. Large volumes of raw materials are handled, stored, and transported daily in the processed food industry. Plastic pallets are widely used for material handling throughout manufacturing and transportation.

The global processed food industry has seen significant growth due to an increasingly busy lifestyle and an expanding middle-class population. Furthermore, the rapid introduction of new food and beverage products, combined with the rising penetration of e-commerce and organized retail players, has resulted in the growth of the processed food industry. Key food manufacturers are rapidly expanding their manufacturing capacities and geographic footprint.

Another primary end-use industry in which raw materials, semi-finished and finished products are constantly handled in large volumes is pharmaceutical. The most significant parameter to consider when selecting a pallet material is free of contamination. Wooden pallets pose a high risk of harboring bacteria, pests, or fungi, and their splinters or protruding nails have the potential to break or tamper with pharmaceutical packaging.

In 2008, Johnson & Johnson Services, Inc., a leading pharmaceutical manufacturer, received several customer complaints about Tylenol's moldy and musty odor, an arthritis medication. Following an investigation, it was known that the contamination was caused by a chemical used to preserve wooden pallets. Similarly, Pfizer, Inc. reported an odor in Lipitor, a cholesterol medication, in 2010.

Regional Analysis

Predominance of Asia-Pacific in the Global Market

Based on region, the global plastic pallet market is segmented into North America, Europe, Asia-Pacific, Central and South America, and the Middle East and Africa. 

Asia-Pacific dominates the global plastic pallet market and is expected to grow at a CAGR of 6.7% by 2030. Asia-Pacific has become a manufacturing hub (TPP) because of the countries participating in the Trans-Pacific Partnership Agreement. TPP is a free trade contract that has strengthened the region's trade and manufacturing sectors, driving demand for plastic pallets over the years.

North America holds the second-largest share in the global plastic pallet market. It is expected to reach USD 3,333 million by 2030, growing at a CAGR of 5.5%. This is due to increased demand for plastic pallets from end-user industries, particularly domestic supply chains. Trade between the United States, Canada, and Mexico, Canada has grown year after year due to agreements such as the North American Free Trade Agreement (NAFTA) and the United States-Mexico-Canada Agreement (USMCA). The robust manufacturing industry, particularly in the United States, contributed to the region's significant share. T-MEC trade agreements are also expected to increase demand for plastic pallets in the region.

Europe acquires the third-largest position in the market. Through E.U. treaties, the European Union has supported sustainable development by recognizing the environmental, economic, and social dimensions. The European Commission published a new roadmap for sustainability in the E.U.'s economy in December 2019, significantly impacting end-use industries because the objectives pushed them to adopt green packaging, including reusable plastic pallets. Furthermore, the market is expected to benefit from spiked plastic recycling activities by pallet producers to promote a closed-loop pallet system.

Segmental Analysis

The global plastic pallet market share is segmented based on materials, estimates, end-users, and regions.

Based on materials, the global plastic pallet market is segmented into High-Density Polyethylene, Low-Density Polyethylene, Polypropylene, and Others.

High-Density Polypropylene (HDPE) is the largest segment and is expected to grow at a CAGR of 5.9% by 2030. Since HDPE is exceptionally durable and has high impact resistance, HDPE pallets sustain little or no damage from rough handling by forklifts and other material handling equipment. Furthermore, HDPE pallets are resistant to weather and chemicals, making them suitable for pharmaceutical and food applications.

Low-Density Polyethylene (LDPE) is a softer material than HDPE and Polypropylene and is commonly employed for making plastic boxes and containers, plastic bags, films, and wraps. LDPE resin is derived from low-density oil; thus, LDPE pallets possess low-tensile strength, which is mainly used for light-duty applications.

Polypropylene is the fastest-growing segment. Firms are increasingly using returnable pallets to decrease plastic waste and address sustainability issues caused by expendable pallets, which is expected to fuel the demand for polypropylene pallets. Moreover, the rapid expansion of automotive and other manufacturing activities worldwide, wherein heavy-duty pallets are broadly used, is likely to boost the growth of the polypropylene material segment over the forecast period.

Based on types, the global plastic pallet market is segmented into Nestable, Rackable, Stackable, and Others.

Nestable Pallet accounts for the largest market share and is expected to grow at a CAGR of 6% by 2030. Nested pallets can be nested into each other, occupying less space during return freight and proving more cost-effective than different pallet types. Nestable pallets are also less expensive than rackable and stackable pallets, making them an excellent plastic pallet option for export or open-loop supply chain applications. In the coming years, the growing need to reduce the weight of bulk transportation is expected to favor the growth of the nestable pallet type segment. Furthermore, their design makes nestable pallets require significantly less raw material to manufacture than other pallet types. Hence, they are less expensive than different types of pallets.

Rackable Pallet is the fastest-growing segment. It possesses a higher strength quotient than stackable and nestable pallets; thus, these are an ideal option for heavy-duty applications. The sturdy structure of rackable pallets also enables their easy cleaning using a pressurized water stream. In addition, rackable pallets are highly durable owing to their rigid structure and robust strength. Thus, the growing adoption of reusable and sturdy pallets by the end-use companies, owing to sustainability issues of expendable pallets, is expected to benefit the growth of the rackable pallet type segment in the coming years. 

Stackable Pallets are preferred in the automobile industry due to the frequent handling and transportation of more extreme elements from the suppliers' facilities to automobile assembly services. The increasing expansion of automobile and heavy metal manufacturing industries is expected to impact the demand for stackable pallets over the forecast period.

Based on end-user, the global plastic pallet market is segmented into Food & Beverages, Chemicals, Pharmaceuticals, Petroleum & Lubricants, and Others. 

Food and Beverages dominate the global plastic pallet market and are expected to grow at a CAGR of 5.9% by 2030. The food and beverage industry has witnessed considerable growth over the last decade because of changing lifestyles, convenience, and increased penetration of retail stores. The expanding processed food industry, including products such as ready-to-eat meals, is expected to augment the demand for plastic pallets. Some key cold chain logistics providers that broadly use plastic pallets in the US include Americold Logistics, Burris Logistics, Lineage Logistics Holding LLC, and the United States Cold Storage, Inc.

Chemicals are the fastest-growing segment. Due to their reduced cost and availability, the chemical industry uses wooden pallets for export applications. However, chemical companies have increasingly preferred plastic pallets in the last decade due to their durability, sustainability, and hygiene. This is likely to increase the penetration of plastic pallets in the chemical industry over the forecast period.

Furthermore, the growing demand for plastic resins from the construction, electronics, and packaging industries primarily drive the chemical industry, which is expected to increase the industry's penetration of plastic pallets. In addition, automobile manufacturers are increasingly utilizing plastic-based components over traditional steel and aluminum parts in vehicles to reduce their overall weight and increase fuel efficiency. This factor is further projected to boost the growth of the chemical industry, thereby benefiting the demand for plastic pallets in the end-use segment.

The Pharmaceutical industry has been rising significantly due to the rising aging population, increasing prevalence of chronic diseases, and the growing health awareness, which, in turn, is expected to drive the demand for plastic pallets. Moreover, expanding the production of generic pharmaceuticals is anticipated to advance the need for plastic pallets in the pharmaceuticals end-use segment.

Recent Developments

• January 2022 - Greystone Logistics, Inc. commenced shipping pallets for a USD 13.5 million purchase order to provide 100% recycled 48x40 plastic shipping pallets to a nationwide retailer at one of their US warehouse distribution centers.
• March 2022 - Cabka Group GmbH (together with its subsidiaries, "Cabka"), a leading integrated circular production company, and Dutch Star Companies TWO B.V. ("DSCT"), a particular purpose acquisition company listed on Euronext Amsterdam, have reached an agreement on forming a business combination to list as Cabka N.V.