Supermarkets and suppliers form task force to find missing wooden pallets that could hit supply chain

The global shortage of pallets that are the backbone of the supply chain has become so dire that some local manufacturers have temporarily ceased production of certain lines.

Coles boss Steven Cain has called the global shortage of wooden pallets, ‘palletgate’, which is threatening to derail the global supply chain.

The global shortage of pallets that are the backbone of the supply chain is now washing through Australia and has become so dire that some local manufacturers have temporarily ceased production of certain lines.

Australian Food and Grocery Council chief executive Tanya Barden, who represents the nation’s suppliers, said her members have been struggling to get enough pallets for months, with some halting production.

To help address the growing supply chain challenge a task force has been formed including the AFGC, Woolworths, Coles, Aldi and Metcash as well as the key pallet suppliers Brambles and Loscam.

“This is an extremely unusual event and we are trying to be on the front foot to avoid problems and make sure we can maximise that availability of product into retail in what normally is a high demand heading into Christmas,” Ms Barden said.

There was a conflation of issues on the demand and supply side that had disrupted the availability of pallets.

“And the ability (to produce) more pallets is constrained by the effect of the bushfires on the availability of timber, so that shortage and milling capacity is constraining what can be brought into the market.

“This is something we have been monitoring for a few months and the situation has exacerbated to the point where we know that quite a few suppliers are really having difficulty in sourcing pallets.

“We are (working) together with the major parties, the retailers, suppliers and pallet providers to understand what the critical needs of the industry are, what the outlook is, and how we can work smooth the flow of pallets.”

She added the industry was hopeful as lockdowns ease and the nation returns to more normal patterns of consumer demand the shortage of pallets will start to correct.

Coles chief executive Steven Cain labelled the global shortage of wooden pallets used by suppliers around the world to ship goods as “palletgate” and revealed a task force had been assembled to work on the challenge.

“Across the nation there is a bit of a pallet gate going on at the moment,” Mr Cain said.

The shortage and higher price of wood, labour shortages, some retailers sitting on pallets through lockdowns and huge disruptions to global supply chains have all conspired to create the shortage.

Mr Cain said echoed comments made by Woolworths CEO Brad Banducci that the shortage of pallets was slowing the delivery of products and causing bottlenecks in the supply chain.

Previously it was access to container ships and shipping that was slowing the supply chain, as well as a lack of staff as Covid-19 exposures saw distribution centres shut or short of workers.

“The lack of wood means not many new ones (pallets) are being produced, obviously there is a surge in consumer demand and then a lot of the non-food retailers obviously locked up in Victoria until Friday and they have got pallets there, so that situation will ease.

“But there is now a pallet task force being established to try to get these pallets circulating faster.”

Earlier this month logistics giant Brambles admitted it was struggling to track down its CHEP pallets to repair and recycle as the pandemic hit transport chains.

Brambles – the owner of the largest pool of reusable pallets in the world – said disruptions to supply chains and constraints on shipping, transport, labour and lumber had increased costs across its business in the first quarter and generated a drop in volumes for its key North American business.

Brambles chief executive Graham Chipchase two weeks ago laid the blame for the constrained performance of its US business and elevated costs across its business on the disruptions to global supply chains and the impact this had on the movement of its pallets.

“Pallet availability remained challenging in the first quarter with industry-wide shortages of new pallet supply across the globe as well as lower levels of pallet returns and longer cycle times in our North American business,” Mr Chipchase said.