Wood Container and Pallet Manufacturers NAICS 321920

Dec 4, 2025 - Lumber Prices Fall on Oversupply, Weak Demand

• Wood container and pallet manufacturers may experience margin relief as log and lumber prices drop. On December 3, lumber futures were trading around $530 per thousand board feet, nearly matching September pricing, which was the lowest level this year, according to Trading Economics. Many lumber buyers frontloaded supplies ahead of tariffs in anticipation of rising housing demand that never materialized. Lumber dealers are offloading bloated inventories into already oversupplied markets, sending prices lower. High mortgage rates and a waning building season have put additional downward pressure on pricing, prompting some sawmills to announce production cutbacks and mill closures.
• US manufacturing activity contracted in November 2025 for the ninth consecutive month, according to the Institute for Supply Management (ISM). The ISM’s Purchasing Managers Index (PMI) in November fell to 48.2% from a reading of 48.7% in October. A reading above 50% indicates manufacturing expansion. November's New Orders Index decreased by two percentage points to 47.4%. The August Production Index rose 3.2 percentage points to 51.4%. Several individual respondents to the ISM survey suggested that demand in the factory sector is being affected by economic uncertainty caused by the unpredictable nature of US tariff policy. Manufacturing activity is a demand driver for wood containers and pallets.

• A new round of tariffs took effect in mid-October, which could pressure margins for manufacturers of wood containers and pallets. Beginning on October 14, 2025, the US will add 10% tariffs on lumber and timber, according to Supply Chain Dive. The wood tariffs stem from a Section 232 investigation lasting several months, which was delivered to President Trump in July. The investigation found that the volumes of wood imports and trade actions by foreign governments related to wood pose a threat to national security. The Trump administration has also used Section 232 tariffs to increase steel and aluminum import duties.
• Logistics trends and increased automation could lead to less pallet demand by the warehousing industry, according to Pallet Enterprises. Industry insiders have noticed some distribution centers still use pallets for inbound and outbound shipments but have reduced or eliminated pallet use in warehouse management as the industry relies more on automated systems. Increasingly, warehouses are using more automated storage and retrieval systems (AS/RS) that leverage shuttles, load-carrying robots, vertical-lift modules, and robotic pickers. Rather than full pallets, AS/AR systems rely on smaller containers, such as totes, bins, and cartons. However, smart pallets that integrate with warehouse management systems - including sensor-equipped racks, real-time inventory tracking, and dynamic slotting - represent an industry opportunity.