Australian businesses fear a flare-up of a pallet squeeze situation where a shortage of pallets severely curbs the free-flow of goods if governments overreact and impose harsh restrictions as the world wrestles with the new omicron variant of COVID-19, while retailers worry about a potential dent in consumer confidence.

Sanjay Dayal, the chief executive of ASX-listed packaging company Pact Group, said it was the potential reaction to the new strain by governments and health authorities that risked a worsening of the pallet shortage, which has gripped many industries.