Pallet lumber prices

Kansas · December 28, 2012, 08:06:09 PM

Things are happening out there. I started really noticing about 6 months ago. People calling for pallet lumber prices. At the time, we were overwhelmed with work, and I priced way high. We did pick up a few accounts anyway. I been in contact with an occasional customer that gets mostly softwood from Canada. He had told me his prices were going up. His pallet lumber costs have risen from .32 cents a board foot to .40 cents. But that is on the fake board foot basis. I translated that back to 5/8 x 3 1/2 on a true board foot basis. Its .55 cents. Technically, its 11/16 or supposed to be. But close enough for my figuring. He expects the price to go up more. That is a 25% rise in price. He told me a newsletter he gets has construction lumber from there pegged at going up 37% this last year. If someone gets the newsletters, I would be interested in knowing if that checks out.

All I am saying, is if you start getting calls from people wanting pallet lumber, be aware. Whether its hardwood or softwood. There will be a lot of pallet companies and private companies trying to find the lumber at old prices. Might as well give them new prices, based on the market. I see a lot of you talk about cutting ties at 45-50 cents a board foot. If softwood is at .55, seems to me hardwood for that kind of dimensions ought to be at least 65 to 70 cents for pallet lumber.

Peter Drouin · December 28, 2012, 08:33:01 PM

Hi Kansas and :new_year:
so you must pay .25 to .30 a bf Int to make money on hard wood, and sell for .70?

Kansas · December 28, 2012, 08:40:39 PM

On strictly pallet lumber, we been paying .22 to .25 cents delivered in. I suspect those days will end before long. We use Doyle scale here.

Peter Drouin · December 28, 2012, 09:00:06 PM

Doyle will help a lot , I dont know how guys [ the logers] do it with Doyle :D :D
what size logs, like 12" small end minimum

Kansas · December 28, 2012, 09:18:38 PM

Most of the logs we use are bigger. On a lot of these salvage jobs where they are dozing out for more farm ground, we do get into the smaller ones. But those bigger ones the Doyle and International scale start to get real close. We make more money on the big ones. Just a lot more board footage cut per hour.

paul case · December 31, 2012, 11:07:28 AM

Kansas,
Could you explain your estimation of ''fake'' and ''real'' bdft?

I had some logs that wouldnt tie and found a few pallet makers buying 4x6-8 cants. They want to pay nothing and get picky like no splits and no bark. The price they want to pay is $.28 to $.30 bdft for 16 bdft each. I cant hardly make my expenses doing that. No sense working for free. I am however making pretty good on pallet cut stock as those are short pieces that generally would go in the slab pile. I have been cutting 5/8x 4 x 40 for $.32 each on clean ones and #2 for $.16. The outfit I sell those to would pay $.50 for 5/8x6x40. That makes those 4x6 cants worth only $.20 more if I cut them into 6'' boards or $.32 more if I make 4'' boards out of them. It may be an ok way to clean up the low quality 8' stuff but I cant see me doing to much of this as I would go broke.

I need to start nailing pallets together for someone who needs a special size. PC

WH_Conley · December 31, 2012, 02:41:48 PM

That is the trick Paul. Finding them is the hard part. Pricing for parts around here is pretty much the same. I figured by the time I do the extra work and expenses I am better off leaving them in the slab and selling the slab for firewood.

Clean Image · December 31, 2012, 11:26:32 PM

I wondered if any one else was seeing this...I had the supplier re-quote a lumber order a few weeks ago for my garage and was a bit shocked with the latest numbers. I used to be more in tune to this kind of stuff but all I've been working with the last 6 years is steel studs and drywall.
Not sure how pallet lumber pricing compares to framing and sheet goods but I saw my original quote of $15,000+ go up over 30% in about a year! Needless to say I was a bit irritated >:(

Here is the justification/explanation I got from the wholesaler...
"The Market Master is our method of tracking the lumber market at a glance. What we've done is quoted a 2700 square foot (bare bones) house and updated that quote weekly based on current market pricing...that's where your increase overall comes from, lumber is up around 30% since August 2011."

If pricing is going up this much, hope it works out better for your guys than it did me! :D

Kansas · January 01, 2013, 04:50:02 AM

Paul, a fake board foot is getting paid for a full 1x4 but its cut 5/8x3 1/2. Big difference in volume of lumber. That is the way so many pallet companies think. Same with the runners. A 2x4 is actually more around 1 1/4 by 3 1/2. They get prices on Canadian or Southern softwood lumber on the full measure, and get the fake. We just translate what they want to real board foot to price it. If that cant is actually 3 1/2 x 5 1/2 that puts the price at near .38 a board foot if you figure .30 cents on the fake. Still starvation wages. I wouldn't do it. Just set the price where you can make money, and cut something else if they don't like the price. We cut a bunch of blocking that we cut full measure 4x6 and get from .50 to .55 cents. Its not a wonderful price, but keeps the log yard cleaned up of about everything. Its in 4 and 6 ft lengths. We just chainsaw cut them, and it doesn't have to be perfect on the length. If we have a bunch of 8 ft logs that average 8'6", we just bundle them together, and cut the bundle in half.

I don't want to discourage you from making pallets yourself. Just remember that if you are working mostly alone, the time spent building pallets means the mill won't be running. You will need a really good air supply, a couple of air nailers, being one is usually down, a supply of pallet nails. Not that big of deal. Some small companies or unusual companies will pay up. The biggest selling point is this for you. You can cut whatever they want. If they want an extra heavy pallet, then price accordingly. We have one company that wants oddball smaller pallets, but want extra thick runners, around 2 1/2 thick, and full one inch boards. Its like a 30 x 36 pallet. We get around 22 bucks each. They only order maybe 2 times a year. Still, not bad money.

One more thing. Most pallet companies don't even understand what they are getting. Same with sawmills. They can't translate real to fake, or vice versa. When they go to sell a pallet to a company, their mindset is usually in the fake. I ran into this before. At one time, we cut a fair amount of lumber for a lumber broker. They wanted 4x4's. I priced at 3 1/2 x 3 1/2. Broker came back and said, its a go, but the want the full 4x4. I had to explain the price would be higher. He couldn't understand it, so I went over all the math. In the end, he found a mill that would cut full 4x4 but charge as if it was the 3 1/2. It doesn't sound like much difference, but it is.

learner · January 22, 2013, 06:51:52 PM

I was hoping to find a thread like this here. Got a call this morning from a man looking for pallet lumber. Said they bought around 1.5 million bf of it last year and was wondering if we would be interested in supplying them some.
Now that is WAY more than I'm willing to even consider without knowing ALL the facts first. Being a new mill I'd consider supplying a limited amount each month but Only if it would be profitable.
I wasn't born yesterday and know of several mills that have gone under by getting locked into Bad contracts(mainly with the railroads for ties).
But if doing business with these guys could help towards getting another mill, then I'm willing to listen to them.
So I guess what I'm saying is, any advice gentlemen, and ladies? Like where to get info on current pallet lumber prices etc? I'm allready looking at having to have a knuckleboom to even consider this.
We have 4 loads of slag coming sometime in the next few days to finish getting the yard ready for all sorts of weather. Last week just about washed us out and it caused us to have to regrade everything.
The ground is Still mushy! Se we have no choice on the slag. Logs are heavy and the trucks and equipment to work with them even heavier. Got the website up and running so we will hopefully be getting more business sooner rather than later.
Getting a contract like this would surely help but I'm concerned about doing it right! So any advice or help would be Greatly appreciated.

beenthere · January 22, 2013, 07:51:55 PM

Quotewas wondering if we would be interested in supplying them some.

How much of "some" are you thinking you want to contract for? What do you want to get for your lumber that you saw from your logs?

paul case · January 22, 2013, 08:02:26 PM

I have cut quite a bit of pallet cut stock for a 1 man operation and I havent ever had a contract. They tell me what they will buy and for how much or for my price and I cut it out as I am making other higher priced lumber or cants. They pay when I deliver. PC

learner · January 23, 2013, 05:50:02 PM

Quote from: beenthere on January 22, 2013, 07:51:55 PM
Quotewas wondering if we would be interested in supplying them some.

How much of "some" are you thinking you want to contract for? What do you want to get for your lumber that you saw from your logs?

Both good questions beenthere. Cutting the proper widths and thicknesses is easy enough, but the lengths he is requesting will require a LOT of additional cutting. That translates to either less sawing or more employees. It's the time involved and expense of hiring more people that I'm looking at here.
I'll have to talk to him again and find out what he is looking for, price wise, but I'd like to have an idea before I get into that with him. I'll also have to do a test run to figure out just how long it would take to produce 1 pallets needed lumber. That's the only way I can think of to figure the amount we could produce in a day, week or month. And I don't want to take away from our ability to custom saw for people. That's why I'm trying to get an idea what people charge for their pallet lumber and about how long it takes them to produce so and so amount of it. I don't want to take bussiness from other sawmills in the area, but most of the original mills doing this have since gone out of bussiness. Retired or just produce for local pallet makers. We've visited just about every mill within 50 miles and most of them specialize in other things. These guys are out of San Antonio and evidently the mills around there have trouble getting timber. Something we in NE Texas don't have a problem with.

Ron Wenrich · January 23, 2013, 06:09:50 PM

What kind of specs are they talking about? It sort of sounds like they want pallet stock that is cut to length, and separated. I don't know what type of equipment you have, but pallet plants use automated methods to get pallet stock from pallet cants. They most often double end trim to the length they need. If they're running 40" pallet stock, they'll cut 10' cants into three 40" cants. Then they'll run them through a gang saw and produce a pile of boards by the thickness they want. They also use automatic stackers. Its hard to compete against that type of automation.

To me, pallet lumber happens to be lumber that won't make grade. We accumulate that during the normal course of sawing. Depending on species and log grade, we won't get much if there is a higher calling. We saw pallet cants (3½x6) out of all logs that won't make ties. We also get some boards that are separated. But, we don't saw specifically for the pallet industry. None of this material is double end trimmed.

We don't have any contracts with any of our buyers. When we have a load, then we send it to them. If you produce a good product, you won't need a contract.

learner · January 23, 2013, 06:29:20 PM

Quote from: Ron Wenrich on January 23, 2013, 06:09:50 PM
What kind of specs are they talking about? It sort of sounds like they want pallet stock that is cut to length, and separated. I don't know what type of equipment you have, but pallet plants use automated methods to get pallet stock from pallet cants. They most often double end trim to the length they need. If they're running 40" pallet stock, they'll cut 10' cants into three 40" cants. Then they'll run them through a gang saw and produce a pile of boards by the thickness they want. They also use automatic stackers. Its hard to compete against that type of automation.

To me, pallet lumber happens to be lumber that won't make grade. We accumulate that during the normal course of sawing. Depending on species and log grade, we won't get much if there is a higher calling. We saw pallet cants (3½x6) out of all logs that won't make ties. We also get some boards that are separated. But, we don't saw specifically for the pallet industry. None of this material is double end trimmed.

We don't have any contracts with any of our buyers. When we have a load, then we send it to them. If you produce a good product, you won't need a contract.

Yes Ron I've learned that since getting his call. Just another reason I'm getting ALL the info I can before I call him about this. Here are the specs for what they want. You'll see the name of the company at the top if anyone out there wants to inquire about producing for them.

Until I get more sure of what I'm doing, I'm taking it slow.

paul case · January 23, 2013, 06:34:38 PM

I make and sell 5/8x3½x40 for $.32 each and $16 on the seconds. Anita and I can run 2 bundles of 566 each in about 3 hours. Now that is all out of the sides of logs. I have a different , better market for the cants from the middle of the log. I know that we arent setting the world on fire at this pace but It beats throwing it away IMO. Some of what I cut up could be sold for flooring since it is mostly oak, but I havnt been able to find a local market for it.
We trim to length with a 14'' cutoff saw and run the blanks through a resaw to make the boards.
PC

ElectricAl · January 23, 2013, 06:40:37 PM

Paul is doing good @ .32 for 5/8 x 3 1/2 x 40
Up here in Iowa his board is only worth .22 delivered.

learner · January 23, 2013, 06:56:22 PM

Thank you Paul and ElectricAl! That is Exactly what I needed to know. So if I'm figuring this right paul, that's around $350 for a little less than a half days work. Now, this guy said that they have their own trucks, so I imagine they are gonna want a lower price. That being said, I'm thinking I'll either need more help or some sort of saw that will help make things more productive and easy.
That type of investment would Definately need a contract! I'll need some sort of guarantee that they will buy before I'll commit to buying more equipment.
We have the edger and two radial arm saws but maximizing production while minimizing time is the key to making a Decent profit with it.
Thank you gentlemen. I'm learning more everyday and owe it to good men like you.

Ron Wenrich · January 24, 2013, 06:14:56 AM

The problem with a contract is that you're on the hook for volume and price. What happens when the price of pallet stock goes up and you're locked in? What happens when you can't get the logs?

The other thing to look at is where Paul says he gets his material from. They're side cuts and many would have been thrown into the slab pile, since he has no alternative market. Basically, he's taking a waste product and adding labor to make his product. There is no resource cost.

In this business profit = lumber value - log costs - mfg costs. See how well cutting pallet stock fits into that formula. You have to know how much it costs to make the stock. If you're cutting 5/8" on your mill, you'll be making a whole lot more cuts than cutting heavier cuts. The cost to make the cut is the same whether you're cutting a 5/8' board or a 4" board. As volume goes down per cut, sawing costs rise.

Just make sure you put a pretty sharp pencil to your calculations before you jump in too deep. Most guys have said that cutting pallet stock is a slow road to the poorhouse.

paul case · January 24, 2013, 09:00:02 AM

Ron is right. I am making those boards on the side. I pay $.25 for logs and sell cants for $.425 to $.47 and with the overrun on the scale I almost always get more than $.30 for sawing them up. The stuff off the sides is free you might say. I just cant stand to waste the stuff and the whole pallet cut stock deal makes a good paying job for my wife. It works well for us.

I would say watch out for the contract as well. You may get started and not like it. Dont get tied to something you arent sure of. I couldnt read the size sheet you posted but if you dont have a resaw, I would try to make stringers( usually a 1¼x3½x whatever length) or 6'' boards as they usually pay better. You move more bdftage with less cuts that way. PC

WH_Conley · January 24, 2013, 09:46:40 AM

Learner, nothing to do with price. Get rid of the radial arm saws and just go to Harbor freight and get a compound miter, but leave it at a straight cut. The reason I say that is in a production situation where you can get in a hurry and get tired a radial arm is less forgiving, especially dull. I seen one fed too fast or the piece wasn't all the way to the back, not sure. Anyway the only thing that kept it out of the fellows belly was it ran out of cord. Just as a personal belief, leave them in the woodworking shop, not the sawmill.

Prices on cut stock here are 18 cents a board foot on actual measure. I leave those little boards in the slab.

beenthere · January 24, 2013, 11:46:19 AM

QuoteAnyway the only thing that kept it out of the fellows belly was it ran out of cord

WH
Sorry, I gotta ask.... how does a radial arm saw "run out of cord" ??

I have a radial arm saw, and no way can it "run out of cord" so am curious as well as I'd like to know in case I am in grave danger I don't know about.

WH_Conley · January 24, 2013, 02:40:48 PM

This one had a clamp holding the cord to the mast.

Bibbyman · January 24, 2013, 04:28:22 PM

I can see a couple of these little pallet boards in most every slab we throw on the pile. So, what?, probably a $1.00/log or more could be recovered.

Sounds like a no brainer. But when you consider getting these little boards out and cutting to length takes lots of labor, investment in equipment, and a market that fits your production level and then balance the profit against what you could do with the same time doing something else, I feel comfortable pitching the slabs on the pile.

ElectricAl · January 24, 2013, 06:31:19 PM

Learner,

If you are curious about how much money you won't make sawing 5/8 deck boards.

Pick your junkyest log, scale it to find the cost.
Start the timer . Load it, saw it, edge it, chop it, stack it, band it, move it, write an invoice, move it.
Stop the clock. Add 15% to the time for the real world.

Stringers should be more profitable.

Don't sign a contract. See if they'll give you a PO with "As Develops"
That way the price is set and you can produce as much or as little as you want.
You don't want to be committed to sawing for 10 cents when a custom sawing job comes along that pays 35 cents.

ElectricAl