CHEP says the pre-Christmas pallet shortage is easing after it invested heavily in supply and repair

The availability of wooden pallets has been improving since the pre-Christmas shortage that threatened supply chains.

Global pallets maker CHEP says there’s been an improvement in supplies. Picture: Chris Walls

The world’s top pallets distributor, CHEP, is seeing a gradual improvement in the availability of pallets to Australia’s biggest retailers after a shortage in the lead-up to Christmas threatened to dislocate local supply chains and potentially leave some shelves empty.

The newly appointed country manager for CHEP in Australia, Stuart Crabb, has written to clients – supermarkets, general merchandise stores and other retailers – saying a focus on diversifying its timber supplier base and the signing of several new pallet manufacturers in Australia was building resilience in the pallet pool.

However, despite the improvement it was yet to return to pre-pandemic levels.

CHEP, owned by global supply chain specialist Brambles, has been working closely with its biggest customers, known in the industry as “de-hirers” and which include the major supermarket chains, to ensure pallets are not hoarded but returned promptly for servicing.

This has helped alleviate constricted pallet supplies experienced late last year, as well as through the Covid-19 pandemic.

“We have also been actively engaging with our major de-hirers to facilitate the prompt return of pallets to our service centres to allow for the direct supply of professionally conditioned pallets to customers,” Mr Crabb said.

“As a result of this engagement, we are starting to see pallet return rates gradually improve.

“We encourage all customers and other parties you trade with to also return pallets to CHEP directly.”

In December, a looming pallets shortage had become so dire that the Australian Food and Grocery Council – the peak representative body of food and grocery suppliers – raised the alarm with the government and Australian Competition and Consumer Commission.

Food and grocery suppliers had become increasingly anxious they would run out of pallets, making it impossible for them to transport their goods from warehouses to customers. As a result, many customers hoarded pallets rather than send them back to CHEP, which exacerbated the problem.

A Brambles spokeswoman said the CHEP supplier had started seeing improving conditions in the period after Christmas as a result of its proactive engagement with its major de-hirers.

“This is allowing for an increase in the direct supply of professionally conditioned pallets to our customers,” she said.

“In parallel, we have been continuously investing in growing our pallet pool and encouraging all customers to promptly return pallets to our service centres in greater volumes.”

“For the 2023 financial year, we have almost doubled the number of new pallet purchases in Australia compared to the five-year historical average.

“We have started to see modest increased levels of pallet returns to our service centres, which is helping the movement of pallets back across the network. Whilst it is still early days, we have made good progress since Christmas and are optimistic that we can continue tracking in the right direction.”

In his note to customers, Mr Crabb said CHEP had recently invested in capacity and a new service centre that would help speed up the movement of pallets between retailers and the company as well as improve the speed of repair times.

CHEP is opening a new service centre in South Australia this month. It will feature high-tech assisted repair technology and scanners designed to facilitate more efficient repair, maintenance, and reallocation of pallets.

The company has also signed an agreement for a new service centre at Redbank, Queensland, to service the greater Brisbane area.

“For customers wanting pallets directly supplied from CHEP, we’re in a stronger position to meet that demand now than at the same time last year,” the Brambles spokeswoman said.

The simple wooden pallets are the workhorse of the global supply chain and are crucial for shifting most consumer goods.

Operational issues since the outbreak of the pandemic interfered with manufacturing and supply. These included shortages of wood and workers, the rising price of timber since the outbreak of the war in Ukraine, and legal action by environmental activists to halt logging that has restricted timber supplies.