What are pallets?
Pallets, which date back to the 1930s, are a relatively modern development. They've been the industry standard for shipping consumer items in recent decades. Pallets lend themselves to automation, allowing businesses to save time and money. A pallet is a crucial instrument in the supply chain's many procedures, from transportation to warehousing. It's a platform made of slats of wood or other materials like plastic, metal or cardboard. The commodities can be grouped on this platform, forming a uniform, safe and efficient loading unit. Pallets also allow for the handling and distribution of commodities from point of origin to point of destination. Pallets are used by 93 percent of all enterprises that handle goods, according to the National Wood Pallet and Container Association.
What is the pallet shortage affected by?
- Wholesalers, distributors and retailers' efforts to maintain sufficient non-perishables inventories in light of previous pandemic-related impacts.
- The availability of wood for repairing and constructing new pallets.
- When lumber is available, the price of it is rising.
- Inventory that isn't perishable has a longer stay period.
- There aren't enough trucks to move pallets.
Due to a scarcity of timber and wood products, the cost of raw lumber has risen by 200 percent to 350 percent and the cost of wood pallets has risen progressively. Pallet costs, for example, have climbed by more than 400 percent in the last several weeks if the pallets are even available, which they aren't often. Companies are compelled to import pallets from other countries, incurring border and transit charges in the process. Due to delayed and cancelled orders from pallet providers, pallets are being held in-house, resulting in greater storage costs and increased congestion within operations.
What is the potential solution?
Company leaders across the supply chain must work together to strike a balance between organisational goals and overall availability of goods and food. There is little doubt that if there isn't a concerted effort across the supply chain to secure pallet availability for produce transportation, meeting buyer and eventually consumer demand for food will be difficult, if not impossible, for the grower-shipper community.
Until the pallet issue is rectified, industry groups believe that temporary adjustments or exclusions to pallet regulations, as long as those deviations do not jeopardise safety, would be extremely beneficial. To understand the position and pallet inventories and availability, all supply chain participants should have regular contact with their pallet providers.