Global Wood Packaging Market - 2022-2029

Market Overview

Wood Packaging Market is expected to grow at a CAGR of 4.45% during the forecasting period (2022-2029).

Wood packaging is the broad word for packaging solutions such as containers, pallets, boxes and others constructed of wood to support, protect or carry a commodity. The IPPC seal, which substitutes the plant passport for intracommunity transport and the phytosanitary certificate for export, is on wood packaging material prepared in accordance with ISPM 15. This respective seal has a unique code for each company. All wood packaging complies with ISPM 15 in the European Union (EU). According to the relevant regulation, all businesses producing wood packaging must utilize treated and debarked wood. When imported, specific wood packaging materials must be pre-notified in TRACES.NT and submitted to phytosanitary inspections by the ASTA. Companies handling wood packing material in Luxembourg are inspected and approved by ASTA.

Market Dynamics

Growing switch to wood-based packaging from single-use plastic packaging is a major market driver for the respective market. Nonetheless, insect infestations and customs rejections restrain the market's growth.

Growing switch to wood-based packaging from single-use plastic packaging

Innovative bio-based materials as substitutes for polymers derived from fossil fuels for packaging applications have been developed in response to growing environmental concerns from businesses and consumers. There is much space for improvement and researchers are attempting to develop sustainable plastic substitutes that might be just as useful, affordable and common as conventional plastics. A promising strategy that can potentially cut greenhouse gas emissions significantly is the development of bio-based packaging materials. Alternatives to plastic made from biomaterials are produced using plant-based raw materials, which helps plants absorb atmospheric CO2 as they grow.

These bio-based products are almost carbon-neutral when recycled or composted since CO2 is released back into the atmosphere (as the manufacturing process generates negligible greenhouse gasses). In the last ten years, bio-based materials have increased significantly in the sustainable packaging sector, signaling a shift toward waste reduction, greener packaging and a concentration on biodegradable and biorenewable materials. Currently, just 1% of the packaging materials used in Europe and North America are made of bio-based materials. However, the need for bio-based packaging materials, such as wood, is anticipated to increase quickly over the next few years and surpass 9 million tonnes yearly by 2023. As a result, the growing switch from single-use plastic packaging could be recognized as a major market driver.

Insect infestations and customs rejections

By requiring treatment of WPM to kill embedded insects using heat, fumigation or other permitted treatments, the international regulation known as ISPM#15 (International Sanitary and Phytosanitary Measures #15), implemented by U.S. in 2006, was intended to tackle the infestation problem. A government stamp identifies treated timber. According to research, this has only been partially successful and U.S. often obtains WPM that bears the label "treated" while being infested with insects. The respective scenarios can happen if the treatments are not completely successful, applied incorrectly or not or if trading partners falsely tagged the wood.

About 700 incoming shipments to United States are found to have bug infestations in WPM annually by Customs & Border Protection. Depending on the kind of insect, this could lead to a significant punishment for the importer or shipper (up to the value of the cargo) and possibly even a requirement that they promptly re-export the contaminated cargo. The re-exportation can be particularly expensive if a ship must be completely turned around and transported somewhere else due to infected WPM. For instance, the Pan Jasmine, a 590-foot vessel flying the flag of Panama, was recently turned around by CBP before it could land at the Port of New Orleans because it contained contaminated dunnage. Each time such an incidence occurs, importers frequently lose hundreds of thousands of dollars and in some situations, the cumulative loss from a single occurrence might reach millions.

COVID-19 Impact Analysis

The earliest waves of COVID-19 had a detrimental influence on the global wood packaging market, just like any other market. The necessity for specialized workers, substantial industrial reagents and large-scale machinery for the industrial-scale manufacture of wood packaging has delayed its production. Curfews in the industry and the requirement for social isolation during the pandemic greatly hindered production. The availability of raw materials required to produce wood packaging and completed items was significantly restricted by the COVID-19 pandemic's worldwide lockdown. Supply and demand dynamics in the wood packaging market were significantly altered.

Furthermore, price rises in the wooden pallet and packaging business were considered unavoidable due to the pandemic's effects on the supply chain, according to the European Federation of Wooden Pallet & Packaging Manufacturers. As described in the FEFPEB's quarterly Pallet Timber Price Index, independent indices from the member states of Europe showed a significant price increase during Q4 2020 and it is anticipated that prices will climb throughout Europe in 2021. Additionally, lockdowns and restricted access to raw materials reduced overall activity in end-use industries, which reduced demand for wood packaging. However, since the prohibitions were abolished, the global market for wood packaging has increased significantly. The market is further stimulated by the anticipated expansion of the food and beverage, shipping and transportation industries, among others, in the post-COVID-19 environment.

Segment Analysis

The global wood packaging market is classified based on type, application and region.

The compliance to handling devices, recyclability, reusability and heavy end-user application allows pallets to dominate the type segment

Wooden pallets are crucial to the global handling and distribution process because they allow for transport and storage platforms' safe, efficient movement. For instance, according to Rose Pallet Company, U.S. wood industry collects 42% of the annual increase in hardwood timber that is physiologically available for harvest. Additionally, more than 1.8 billion pallets are used daily in U.S. and 93% are made of wood.

In many nations, pallet building is becoming more standardized. For instance, Europe's most common size of wood pallet is an 800 mm × 1,200 mm unit due to the adoption of the EUR pallet (defined by the European Pallet Association). However, in North America, where the majority of pallets in use are custom-designed to meet transit and shipping configurations, wooden pallet sizes and designs are significantly less standardized. Pallets are created in various sizes and layouts to support handling devices (often forklifts) and loads, despite having standardized versions.

Statistically, 70% of all wood pallets are recycled, which is a lot more than aluminum, paper or plastic. Additionally, trees are typically not felled to produce pallets since a by-product of the wood used to build homes and furniture is the wood used to make pallets. The food and beverage sector uses pallets the most globally, second by the chemical and pharmaceutical sector, than agriculture. Further, The main benefit of using wooden pallets for packaging is that they have a four to five-year lifespan and can be fixed for reuse if they get broken and reused. All the aforementioned factors allow the pallets segment to dominate the type segment of the global wood packaging market.

Geographical Analysis

The large-scale adoption of wood pallets in Asia-Pacific's packaging and shipping business, along with growing investments in the region, boosts the region's wood packaging market

Since pallet utilization has been relatively high in the Asia-Pacific area throughout the forecast years, Asia-Pacific is heavily favored to dominate the regional segment of the global wood packing market. For large-scale imports and exports of products, the region exhibits the largest utilization of wooden pallets. The most developed markets in the upcoming years are likely to be found in nations like China, India and Japan. Furthermore, the Asia-Pacific pallet market has been characterized by the sustainability theme. End-user sectors that choose goods with longer lifespans can be identified, encouraging regional producers to innovate on these lines. Pallet makers have also collaborated on similar projects.

Additionally, the area has seen money being injected, accelerating market expansion. For instance, Morgan Stanley and Leading Enterprise in Advanced Pooling announced in January 2021 that the infrastructure-focused fund Morgan Stanley India Infrastructure had invested USD$ 25 million in LEAP India. One of the pivotal players in the country's pallet pooling market, LEAP India, wants to increase its asset base from 4 million units, which comprises pallets, among other things, to 6 million units. The presence of major wood packaging manufacturers further propels the market's growth along with investments and government subsidies available in the region.

Competitive Landscape

The global wood packaging market is highly dynamic, competitive and filled with global and local producers. The market is fragmented due to the presence of numerous large-scale manufacturers such as UFP Industries, Shur-way Group Inc, Rowlinson Packaging Ltd, C&K Box Company, Inc., Totre Industries, Palcon, Ongna Wood Products, ARRINGTON LUMBER & PALLET CO., NEFAB GROUP and Mondi. Pivotal market stakeholders employ tactics like mergers, acquisitions, product launches, contributions and collaborations to gain competitive advantages and recognition in their respective markets.

For instance, PalletOne, Inc., a subsidiary of UFP Industries, has purchased a 50% equity position in Dempsey Wood Products, LLC as of June 27, 2022. PalletOne has options under the purchase agreement to buy the remaining 50% of Dempsey in three years. Ronald Dempsey established Dempsey Wood Products in 1988. The company operates out of a single facility in Orangeburg, South Carolina, where it manufactures kiln-dried timber, pallet lumber and other industrial wood goods. Sales for Dempsey in 2021 totaled US$68.9 million.

Since larger mills manufacture less of this kind of timber, Dempsey's industrial lumber, a crucial component of pallet operations worldwide, has been in limited supply. PalletOne's investment in Dempsey benefits UFP industries and affiliates such as PalletOne, Inc. as it helps the aforementioned parties to secure and expand a crucial long-term supply source of the special Dempsey's industrial lumber.

UFP Industries, Inc.

Overview: UFP Industries, Inc., a provider of lumber to the prefabricated housing sector, was established in Michigan in 1955. With its headquarters in Michigan, U.S. and subsidiaries worldwide, UFP Industries is a multibillion-dollar holding corporation that provides services to the construction, retail and industrial markets. UFP Retail Solutions, UFP Industrial and UFP Construction are some of UFP Industries' operating companies. Worldwide production, distribution and sales of several value-added goods used in packaging, commercial and residential buildings and other industries are handled by the subsidiaries. The business is publicly listed in North America, Europe, Asia and Australia.

Product Portfolio:

PalletOne Inc.: A branch of UFP Industrial, PalletOne Inc. produces goods like new pallets and crates. But the relevant section is also responsible for purchasing and reselling used pallets. The division produces a variety of important wood packaging items, such as HT Pallets, CP Pallets, custom pallets, GMA Pallets, Wood Skids and System Pallets. In addition, the business sells Specialty Products ISPM 15 / HT Pallets, Recycled Pallets and Repaired / Remanufactured Pallets.

Key Development:

On December 10, 2020, UFP Industries announced its intention to pay roughly $232 million for all PalletOne, Inc.'s 100% shares. With 17 pallet manufacturing sites across the southern and eastern parts of the nation, PalletOne, a prominent producer of new pallets in U.S., is headquartered in Bartow, Florida. The company also offers custom bins and crates along with other specialties in industrial packaging and its Sunbelt Forest Products affiliate has five pressure-treating facilities in Southeast U.S. While sales and adjusted EBITDA for PalletOne and its affiliates were US$525 million and US$37 million, respectively, in 2019, by October 2020, trailing 12-month sales and adjusted EBITDA of the company were US$672 million and US$44 million, respectively.

Why Purchase the Report?

• To visualize the global wood packaging market segmentation based on type, application and region, as well as understand key commercial assets and players.
• Identify global wood packaging market commercial opportunities by analyzing trends and co-development.
• Excel data sheet with numerous data points of wood packaging market-level with four segments.
• PDF report consisting of cogently put together market analysis after exhaustive qualitative interviews and in-depth market study.
• Product mapping available as excel consisting of key products of all the major market players

The global wood packaging market report would provide approximately 53 tables, 49 figures and almost 145 pages.

Target Audience 2023

• Manufacturers/ Buyers
• Industry Investors/Investment Bankers
• Research Professionals
• Emerging Companies