Hundreds of pallet industry leaders gathered in Victoria, British Columbia, Canada in late summer for the sixth Interpal conference. Held August 30-September 2, the meeting included a host of speakers, networking sessions, the World Pallet Congress, supplier exhibits, plant tours and entertainment.
As expected, the hot topic at the conference was the international phytosanitary issue. Each region of the world had its own unique view of the situation, and it became clear that international standards will continue to shape the industry for years to come. While the conversations were civil, you could tell that there are tensions between the U.S. and European market over the requirement of debarking lumber used in pallets. And I’m not sure that it revolves around pure science as much as a difference in mindset and market dynamics.
European nations are concerned about the risk of re-infestation, but U.S. producers see significant cost increases to comply with any added debarking/bark removal requirements. U.S. pallet companies fear it would unnecessarily add cost to solve a problem that may not really be a problem. Europeans are customarily used to removing bark now.
If you really listened to what was being said, you can see that the Europeans have a much higher standard of aesthetic quality for their pallets than most U.S. producers do. This is not a slight on any one; it’s just the truth. European pallet companies remove bark on everything now and throw away lumber that would normally be used by manufacturers or recyclers in North America. The focus in North America is on pallet cost. The focus in Europe is on pallet appearance and uniformity. This is especially true for official Europallets, which are manufactured to tight specifications. Wood pallets typically are much prettier looking in Europe than in North America.
During the various presentations and side conversations, Europeans gave advantages for bark removal like improved aesthetics of the pallet, eliminate the possibility of re-infestation, enhanced customer appeal and uniformity. Bark has become a major dividing issue because it must be present to attract pests and give them the opportunity to reproduce. But it is unclear if the presence of a minimal amount of bark is enough to really cause much risk. Bark on a tree in a forest is a very different situation than bark on a piece of lumber on a pallet. The entire dynamic of the situation and interactions between pest, wood and the environment are drastically altered.
Currently, scientists are studying the issue and will hopefully have definitive conclusions to offer world leaders by the end of this year.
While there were differences between countries and markets, in some ways attendees discovered strong similarities from region to region too. Pallet rental has made a strong impact on many major world markets. Increasing lumber and labor costs are pushing pallet suppliers around the globe to become more efficient and raise prices. Foreign markets are not only becoming a greater source of lumber in some areas. They are also a greater source of competition.
Changing Global Lumber Market
Doug Parsonson of Jaakko Pöyry Consulting spoke on the changing dynamics in the global lumber market. One of the most interesting presentations at Interpal, Doug identified a number of interesting trends.
Softwood lumber (79%) dominates the global market compared to hardwood lumber (21%). Doug provided the following overview of market conditions around the globe:
EUROPE
• In Western Europe demand
increases steadily – imports from Russia/Eastern Europe.
• Germany, Poland and Belarus have the majority of the current and future softwood harvest potential/opportunities within the area.
RUSSIA
• Russia’s harvest is restricted by undeveloped infrastructure. Half of production will be processed domestically and the remainder exported.
NORTH AMERICA
• Stable demand/supply development for softwood. Hardwood growing stock
increasing but supply of high quality / high value logs decreasing.
LATIN AMERICA
• The plantation based forests are expected to increase by nearly 40 million cubic meters by 2010, evenly divided between softwoods and hardwoods.
OCEANIA
• Significant softwood harvest potential, for domestic processing and overseas exports.
ASIA PACIFIC
• Continued decreasing trend in both softwood and hardwood harvest.
SOUTH AFRICA
• Supply of industrial wood is almost exclusively based on industrial
plantations.
Canada and the United States continue to dominate global production of softwood lumber. Japan is shifting toward importing more lumber and less processing of raw logs. With huge timber resources, Russia is a sleeping
giant that may be starting to awaken
as more companies invest and build
infrastructure.
Doug predicted that India will become a much bigger target for the imports of sawn lumber. China’s consumption growth will continue fueled mainly by imports because it has so little standing timber. Brazil is a growing source of hardwood lumber while the United Sates continues to be the largest single supplier on the global market.
World Pallet Congress
Leaders of trade associations and representatives from the pallet industry around the world met at the World Pallet Congress, which was held in conjunction with Interpal VI. Although it is not an official regulatory or standards body, the World Pallet Congress does develop consensus ideas and plans for the global pallet industry. Members discussed various changes to the existing voluntary phytosanitary standard for solid wood packaging (ISPM-15). Changes to the existing standard are scheduled to be discussed by government representatives in 2007.
The World Pallet Congress proposes that a batch number be added to or beside the official certification stamp. This would give more identity to and provide greater tracing of particular pieces of wood packaging. Enhanced tracking capabilities would help curb potential abuses by unscrupulous suppliers.
World leaders also discussed the need to revise definitions for reuse, recycle and repair in the standard because these terms mean different things depending on the market.
Standardization
A panel of three global leaders discussed the pros and cons of international pallet standardization. Bruce Scholnick, president of the National Wooden Pallet & Container Association (NWPCA), said that standards bring simplicity but limit innovation. He talked about how standards are much more than just a pallet size. Future standards should focus on design specifications and performance. Bruce recognized that standards may not work in some industries where clients have very specialized needs.
John Mead, a European pallet consultant, added that ultimately standards must be driven by real world costs. Existing standards, such as those developed by the International Standards Organization (ISO) are voluntary standards and not forced by any particular regulatory body. The global electronics industry has developed a global standard that
is used by many companies around the world. But most standards today are
regional in nature, especially since
different parts of the world use different size footprints.
Thanks CWPCA
The recent Interpal is the third one to be held on North American soil (Interpal II in Ottawa, Canada and Interpal IV in Nashville, Tennessee). Interpal VI was a success in large part due to the efforts of the Canadian Wood Pallet and Container Association (CWPCA). Thanks Gordon Hughes and the rest of the CWPCA for hosting this event. Victoria is a beautiful location and once again, the Canadians put on a good show.
