How can logistics cope with the constantly rising prices of raw materials?

The prices of raw materials for the logistics industry continue to rise. 

The prices of raw materials not only for the logistics industry, but in general – went crazy.

A global pandemic of Covid-19, which has lasted 3 years and is still smouldering in various places around the world (including China). The trade war between the US and China, which has been going on for more than 4 years. And the last: the war in Ukraine. Global economy and supply chains have suffered many trials in recent years.

Prices of precious metals, iron ore, timber, plastics and other raw materials

At the beginning of March, the London Metal Exchange stopped nickel trades after its price jumped more than 2 times in less than 12 hours, reaching record highs of more than 100 thousand dollars per ton. This is an unprecedented situation for the 145-year-old financial structure. How did it come to this?    

Russia is responsible for 10% of the world’s nickel supply.  6% of aluminum production. The total value of Russia’s natural resources is estimated at $75 trillion! The country has the largest mining industry in the world, producing mineral fuels, industrial minerals and metals. In addition to aluminum and nickel, Russia is a leading producer of arsenic, cement, copper, magnesium metal and compounds such as nitrogen, palladium, silicon and vanadium. The country is the second largest exporter of rare earth minerals.

The rise in the price of natural gas and oil has also led to a surge in chemical prices. This was followed by a jump in the price of plastics. Plastics and metals are used in literally every household long lasting appliance.  These are fans, boilers, stoves, refrigerators, computers, etc. Their manufacturers have, naturally, raised their prices. In April alone, the jump was over 10%. And this trend has no prospect of going away soon.

The price of metals, wood and plastics also has a major impact on the logistics industry. In particular, the price of pallets and pallet boxes, which are used in the transport of everything from wheat and vegetables to car parts and refrigerators.  And this is one more reason why the price of the final product of manufacturing companies has become even more expensive….

The surge in the price of logistics products and services?

The jump in prices for new pallets and new pallet boxes in March and April 2022 alone was 10-15%.  Even before the war in Ukraine, pallet boxes had risen seriously in price because of the rise in the price of timber and metals caused by the Covid-19 disruptions in the supply chains.

Another factor that led to further price increases was the lack of labour due to quarantine restrictions. This reduced the supply in the market. As the supply of new pallet boxes slowed and the supply of pallets and rental pallet boxes was disrupted, interest in reusable pallet boxes increased. Some companies even resorted to reusable cardboard pallet boxes. Which is a big risk to the goods and products being transported if not done properly.

With the lifting of Covid restrictions and the normalization of different modes of transportation, there is hope that the price of pallet boxes will come down to pre-Covid crisis pricing levels. But they proved unfounded. War broke out in Ukraine.  The price of wooden pallet boxes from 1 January 2021 to March 2022 has jumped by over 50%.

What is the solution? How to reduce your logistics costs?

1. Pallet boxes second hand.

The price discount, compared to the price of a new pallet box, can be up to 50%. At the same time, if you decide to buy 2nd hand pallet boxes (in most cases we are talking about plastic or metal pallet boxes) from a proven manufacturer or distributor like Zamko, for example – the quality of the logistics product will be guaranteed.

2. Reusable packaging

When it comes to returnable packaging there are 2 important factors to consider. The best example of reusable pallet boxes are the plastic ones. They are built to last. They are extremely durable, secure for the goods being transported and stored in the warehouse, and safe for the warehouse teams.

Reusable packaging is best suited for projects that are on shorter to medium distances. For longer destinations, the appropriate type of packaging is ‘send and forget’ (i.e. cardboard pallet boxes). 

3. Custom and foldable pallet boxes

Improper packaging is a serious problem that can cost you a lot of money. The good thing is that this is probably the only completely preventable problem that many companies face. Custom packaging that perfectly fits your goods will save you money from buying extra packaging (less packaging, fewer pallet boxes – less cost).   

Folding pallet boxes are an extremely useful logistics product.  With their help, you will drastically reduce your fuel costs during transportation. Especially when reverse shipping the empty containers. Collapsible pallet boxes reduce the volume of empty containers by up to 85%. They are also of great use in warehouse spaces. In combination with folding racks, you will be able to maximise the spaces in your warehouse.    

4. Pallet boxes for rent or lease

Pallet box rentals are the best option for short-term projects and non-standard goods for your company. 

This solution will give you the breathing room you need to fulfill your order first and then checkout. There is virtually no price difference between pallet boxes that are purchased and those that are leased. And in times of economic crisis, a delay in payment time can be a “life saver” for the company.

The right choice of pallet boxes

The right choice of pallet boxes for your goods and products will ensure security in transport and reduce your costs. Zamko’s experts are at your disposal for advice and assistance.