The war in Ukraine has claimed a new collateral victim in Europe: the market for wooden pallets – crucial in the packaging, handling and storage of goods.

According to the European Pallet Association. (EPAL), more than 600m of its pallets and 20m of its box pallets are in circulation.

For several weeks now, the sector, which was already operating under challenging market conditions triggered by Covid and the supply chain disruption it has wrought, is experiencing additional strains due to a shortage of wood, rising manufacturing costs and a scarcity of producers.

“In a few months, the price of a single (new) pallet has risen from €7 to €29. They are increasingly difficult to find and more expensive to produce in a context of soaring raw material costs and in particular the price of wood,” according to La Cha?ne Logistique du Froid, a French trade association of 120 companies specialised in the transport and storage of fresh and frozen products, one of the many business verticals that depend on these softwood structures.

It highlighted the lack of optimisation in the usage of pallets by all of the different parties in the logistics chain, with breakage, loss, and in some cases, long retention times among other factors which have contributed to the current scarcity.

The association’s chief delegate, Valérie Lasserre, warned: “Without pallets, supply processes cannot be carried out successfully. It is urgent to sit down around the table to find a better balance between supply and demand.”

The manufacturing costs of wooden pallets, which can be re-used over a period of several years, rose by an estimated 40% in 2021 and Russia’s invasion of Ukraine at the end of February has exacerbated the inflationary pressures. Ukraine is a major producer and before the war was exporting close to 15m pallets to European markets annually. However, its workshops are now standing idle, and its exports have dried up, creating a shortage of new products.

In addition, a number of countries in Western Europe would in normal times source up to 25% of their pallet and packaging wood from Ukraine, Russia and Belarus but the war and sanctions have brought supplies from these three countries to a halt.

TMF Transports, based in southern France, delivers almost 40,000 second-hand pallets to retail chains and e-commerce businesses located across the country each month. But as a result of growing shortages, is now faced with sizeable price hikes. “These pallets had a unit price of around €4-5 before Covid, but this has increased to €10,” Sami Belkadi, the company’s packaging and pallet tracking manager, told TF1 TV news.

Other companies, such as Urban Palettes Recyclage, testify to the current shortage of second-hand pallets. “We recycle on average a little more than 100,000 pallets per month. This month we have seen a drop of 25% in the number of pallets received,” said Sullivan Coutant, regional director for the Paris region.

In France, two out of every three wooden pallets have been through a recycling process and today can command a price of up to €14 per unit, which, although steep compared to historical levels, is half that of a new model.

In response to the shortages, start-up Magic Pallet, has developed a pallet exchange platform to optimise available stocks. “We open our pallet storage facilities to shippers and they can go and pick them up wherever they need them to meet their needs”, explained Wissam Mimouni, administrative and financial director of the company which has seen business activity increase by 50% in the space of a single month.