Dependent on Russia: Pallet builders are running out of nails

Dependent on Russia
Pallet builders are running out of nails

Whether food, electronics or medicines – everything is transported in boxes that stand on pallets in trucks, freight trains or airplanes. These wooden pallets could soon run out. Because the manufacturers are dependent on special nails, which are almost exclusively made of Russian steel.

Because their Nagel suppliers can no longer get steel from Russia, German pallet manufacturers are in danger of running out of material. In a few weeks, the first companies could be forced to shut down their production, said the Federal Association of Wooden Packaging, Pallets and Export Packaging (HPE) in Bad Honnef. 90 percent of the so-called wire steel, from which the nails used for pallets are made, comes from Russia. However, steel deliveries are prohibited because of the Russia sanctions. According to the association, there are no short-term alternatives because special nails are required.

Pallets are of great importance for industry and trade. Whether food, electronics or medicines – everything is transported in boxes that stand on pallets in trucks, freight trains or airplanes. Last year, the domestic pallet industry produced around 120 million such wooden structures. According to the association, about half of these are reusable pallets, and the so-called Euro pallet is particularly well known. The other half are disposable products whose wood is later processed into chipboard, for example.

The pallet industry is characterized by medium-sized companies. In Germany there are around 180 manufacturers with an average of around 35 employees. “It is currently a very difficult situation,” says the board member of the association, Joachim Hasdenteufel. Most companies in the industry get their nails from suppliers in Eastern Europe, such as Poland. “We were surprised that these suppliers rely almost entirely on steel from Russia – we didn’t know that.” The right steel could possibly also be ordered in Asia. However, the capacities there are limited. “At first and second glance there are no alternatives,” says Hasdenteufel. He estimates that it could take six to eight months for the right steel to arrive from other markets.

With dependence “in the best company”

Can’t you just use different nails? No, says HPE Managing Director Marcus Kirschner. “It’s about loose nails that are filled into our machines and then attached automatically.” So-called collated nails, which are wrapped in cardboard or plastic as strips, could not be used in the pallet machines. The fact that employees attach the nails by hand with nail guns would be far too much effort and could not be integrated into the mechanical production process.

Kirschner reports that some pallet manufacturers still have enough nails in stock for the time being. For others, the warehouse is almost empty. “It won’t be long before production has to be stopped.” Kirschner and Hasdenteufel did not want to say how large the proportion of German pallet production that is threatened with standstill is – it is about “a few companies”.

Euro pallets and the CP pallets commonly used in the chemical industry are designed for multiple use. Would it really be a problem if fewer new goods came onto the market – couldn’t industry and trade simply rely on the old pallets and use them more? “This is already being done – reusable is commonplace,” says Kirschner. But there is a natural decline. During loading, pallets broke or were badly worn. If fewer pallets come onto the market, such a supply shortage cannot be compensated for by the more intensive use of used pallets, says the association’s managing director.

According to HPE board member Hasdenteufel, the pallet industry is already under pressure given the sharp rise in wood prices. The price of a Euro pallet has increased from almost 10 euros to around 25 euros since 2019. Now there is another problem. “Now it’s not about the price,” emphasizes Hasdenteufel. “It’s about the fact that we can produce anything at all.” The question remains why the pallet industry has made itself so dependent on the world market and is now in danger of having to shut down its machines. “In the course of globalization, it has developed in such a way that one buys preliminary products where one gets the best price,” says Hasdenteufel. “We were in the best of company with this approach – practically the whole of German industry did it that way.

More reusable in the long term

Could a possible shortage of new pallets lead to the reusable idea being strengthened and the wooden constructions being reused more often? Quite possible, says Hasdenteufel. “In the long run, demand for sturdier pallets could increase – we could sell fewer pallets but higher quality.” In addition, the demand for service and repair could increase. However, such a long-term perspective does not help with the current problems. He emphasizes that the industry is looking for other sources of supply at high pressure. However, a quick solution to the supply problems is not foreseeable.

From Greenpeace’s point of view, the pallet manufacturer’s shortage of materials shows how important a functioning reusable system is. Resource protection expert Viola Wohlgemuth says it’s annoying that around half of the pallets are still single-use products. In addition, reusable pallets would have to be used more frequently and repaired if they were damaged. “If multiple use is increased and one-way pallets disappear from the market, the demand for new products will also decrease – and with it the dependence on raw material sources abroad.”

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