01Two prices, two mechanisms
A new pallet is a manufactured good made from a traded commodity. When lumber rises, the input cost rises, and the price follows within weeks. The relationship is direct and easy to model.
A recycled pallet has no lumber in it — or rather, its lumber was bought years ago by somebody else. Its price is set by what buyers are willing to pay, and that willingness depends on what the alternative costs. When new pallets get expensive, buyers substitute toward recycled, demand rises, and recycled prices rise too. The mechanism is substitution, not input cost.
| Scenario | New pallet price | Recycled price | Spread |
|---|---|---|---|
| Lumber spikes | Rises fast | Rises, more slowly | Compresses |
| Lumber collapses | Falls fast | Falls, more slowly | Widens |
| Core supply tightens (Q4) | Unchanged | Rises | Compresses |
| Core supply loosens (Q1) | Unchanged | Falls | Widens |
| Repair labour costs rise | Slight rise | Rises | Compresses |
02Why the spread matters more than either price
If you only ever buy recycled, the absolute price is what you care about. If you buy both, or could switch, the spread is the decision variable.
At a wide spread — recycled at $11.50 against new at $27 — the recycled decision is easy and the applications that genuinely need new are the only ones that should get it. At a compressed spread — recycled at $15 against new at $24 — the calculation for a closed loop with a repair programme starts to look different, because new pallets start with more service life.
- Typical new-to-recycled price ratio
- 2.2–3.0xTypical new-to-recycled price ratio
- Seasonal Q4 swing in recycled pricing
- 8–18%Seasonal Q4 swing in recycled pricing
- How long our quotes stay valid, and why
- 14–30 daysHow long our quotes stay valid, and why
03Core supply moves on a different clock
Lumber moves on housing starts, mill capacity, transport and futures speculation. Core supply moves on retail inventory cycles, and the two are largely uncorrelated.
That is why Q4 is reliably tight regardless of what lumber is doing: retail builds inventory, pallets go under that inventory and sit there, and supply is held while demand rises. Q1 releases it. Agricultural regions spike at harvest on a completely separate schedule. The pattern is covered in more detail in an earlier piece on Q4 scarcity.
04Buying around it
- Lock recycled pricing when the spread is wide. A standing order with a fixed price for 90 days is worth most when new pallets are cheap, because that is when recycled pricing is softest and least likely to be offered on a long window.
- Do not switch to new during a lumber collapse unless the application genuinely warrants it. Lumber recovers; your pallet spec should not oscillate with it.
- Buy counter-seasonally where storage allows. Pallets do not spoil.
- Ask for the validity window on every quote. A quote valid for six months is either padded or will be revised.
- Watch repair labour, not just lumber. Wage costs have risen faster than lumber over five years and they land in recycled pricing directly.
05What we do not do
We do not quote a national average and call it a price. Freight is 30 to 50% of a recycled pallet's landed cost, and it varies more between lanes than the pallet does between grades. A price without a lane attached to it is a marketing number.
The published ranges in our pricing guide exist so you can sanity-check a quote, not so you can plan against them. Send a quantity and a ZIP and you get a real number.
