So, are hardwoods better for pallets? That all depends on who you talk to and what type of pallet you are making. Is Softwood just as good?
Just like politics, the hardwood industry has undergone some major changes over the last few years. And this includes low-grade markets, especially pallets. This reminds me of an old Bob Dylan tune titled, “The Times They Are a Changin.” Dylan’s lyrics explain it all, “For the loser now, will be later to win. For the times they are a-changin.”
For years, the hardwood sector has dominated the pallet lumber market in the East and Midwest. Recently, the Hardwood Market Report estimated that pallets consume 40.5% of hardwood material produced in the United States. Pallets are a huge part of the hardwood sector, and this is true for many reasons.
First, hardwood is plentiful in the region, and producers need low-grade markets to help offset costs and fully utilize material. Also, other low-grade markets are not large enough to soak up all the supply. Another major benefit of hardwoods is its relatively stable market dynamics. Sometimes compared to softwood low-grade hardwood markets are stable without wild price swings.
Hardwood lumber is strong and durable and can produce a very nice pallet. Longstanding relationships between hardwood producers and pallet markets means that there is a stable supply network. Also, many pallet companies are setup to process hardwood cants. All these drivers have made hardwoods the king of the pallet sector for many years. But the times they are a changing…
For years, pallet users had a mental block against softwood lumber. The basic equation was Hardwood = Strong = Good for Pallets while Softwood = Weak = Bad for Pallets. But that all started to change when a big supply crunch occurred in 2013/2014. Hardwood became scare due to unprecedented demand. Pallet guys are low man on the totem pole when it comes to buying power. Sawmills sold to crosstie, crane mat and export markets instead of pallet producers in some cases due to the higher margins. This left industrial users, especially the pallet sector, scrambling to find material.
Pallet providers convinced many customers to try softwood as a substitute. Some customers went kicking and screaming because they were concerned about the strength of softwood. Pallet providers said about softwood, “Try it, you may like it.”
Pallet customers found that in most cases softwood, especially SYP, was strong enough to work well. Many pallet customers are not concerned about the long-term durability of a pallet. They just want it to survive the first trip. And softwood did the trick. Actually, several pallet suppliers use only softwood, which is a good sign for the potential of softwood. Another benefit was that softwood was available thanks to SYP plantations and the growth of softwood in the South.
But once pallet companies tried softwood, many did like it. Some even preferred it. Kiln-dried softwood solved the mold dilemma for many pallet suppliers and customers. Also, softwood has a cleaner, lighter appearance that some customers like. Softwood frequently comes kiln dried and marked according to ISPM-15 so that pallets can be sold for export applications. This gives the pallet user more options, which is a major selling point. And in many cases, softwood can be competitive from a cost perspective.
The result has been that many pallet users have gotten over the mental block to softwood. And I predict that low-grade hardwood percentage of the overall pallet market is not likely to return to the heyday before the Big Transition. But that doesn’t mean hardwood will go away because of the volume of material on the market and the ability to be price competitive. Plus, depending on the design, hardwood can produce a stronger pallet with less lumber. The future of hardwoods in pallets all depends on price and product. Will hardwood suppliers seek to answer the competitive issues raised by softwoods?
So are hardwoods better for pallets? That all depends on who you talk to and what type of pallet you are making. The Pallet Design System™ and Best Load™ software have demonstrated that softwood can perform as well as hardwood. But not all lumber species act the same; some hardwood species are denser and thereby stronger than most softwood species.
The short answer for the above question is “not necessarily.” But many pallet buyers used to specify hardwood for pallets. That trend is changing primarily due to the moisture content and mold issue.
Softwood is here to stay, and the hardwood sector is going to have to get their pencils sharp and be more competitive.
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