The shortage in timber pallets and more specifically the shortage of wood seems long term. This means the transition to plastic is not only inevitable but already under way and accelerating as a result of necessity. Why?
1. There are many advantages of plastic over wood. Wood is heavy, can become infected or contaminated, risk of disease and injury, is hard to mould or modify, expensive to maintain, have a shorter lifespan. 2. Just think of a piano. To the increase the quality of the piano even a little bit is expensive. Because it takes time for the tree to be forested, the wood to be selected and cut. The wood can be affected by temperature and humidity. It is hard or impossible to modify the wood or increase the quality of the wood to make it more durable or less prone to damage or produce a better sound etc. 3. With the shortage and increase in price of wood, wooden pallets lose it’s only and very critical competitive advantage over plastic IMO. Long term. 4. RAN is the only company in the world making 100% recycled plastic. This means they can potentially get the cost of product extremely low or close to free. It’s also very attractive ethically or PR wise for big MNCs to sign contracts with them. It is also very hard to imitate or start from ground zero again. Then there is a strategic geographical location Indonesia, not by coincidence. 5. One of the major shareholders of RAN is a Big European pallet company. Why? 6. American Fundie involvement. Doors start opening, and anything and everything starts becoming possible. 7. Pay now. For the future. We already know how big the pallet market is world wide. Almost anything we touch, eat or see lived on a pallet maybe a few hours before they were utilised. Let’s start taking some busn off 14B market cap Brambles.
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