Imminent Tightening of European Wood Supply Chain Due to Russia’s Invasion of Ukraine

In a statement, the European Federation of Wooden Pallets & Packaging Manufacturers (FEFPEB) expressed “its deep sympathies and support for the people of Ukraine” and noted that, as an organization, it supports sanctions against Russia for its invasion of Ukraine, as well as against Belarus due to its support of Russia.

In that same statement, the FEFPEB also noted that Ukraine has experienced a severe economic slowdown and the halting of production since Russia’s invasion on the February 24, 2022, massively impacting exports. FEFPEB warns of “serious direct impacts” on countries such as Hungary, Italy, and Germany, which import the most softwood from Ukraine.

As a result of the war in Ukraine, FEFPEB says that it expects the imminent tightening of wood supply, with some countries sourcing up to 25% of their pallet and packaging timber from Ukraine, Russia, and Belarus.

According to Timber Online, in 2021, Ukraine exported more than 2.7 million m3 of sawn softwood timber, according to data from UKRSTAT and Russian Customs Authorities. FEFPEB says that a significant amount of this softwood is used to manufacture wooden pallets and packaging in European markets including France, Germany, Italy, the Netherlands, and Poland, while Ukraine itself produced and exported an estimated 15 million pallets, mainly to Europe, last year.

FEFPEB also notes that alternative timber sources in Scandinavia, Germany, and the Baltic States are “only capable of covering a small proportion of the shortfall.” An indirect impact, according to FEFPEB, will also be the unbalancing of the market and increasing competition for more limited wood supplies. This could put upward pressure on prices.