What is driving the pallet shortage across Australia?
Pallets are instrumental in transporting bulk goods, and utilised by businesses globally. However, a number of factors have led to a shortage of pallets available within Australia, and this is consequently placing pressure on supply chains.
Why is there a shortage of pallets?
There has been a variety of factors that have influenced the shortage of pallets. However three leading factors include coronavirus lockdowns, a timber shortage and pallet hoarding.
Timber shortage:
One element contributing to the pallet shortage is the high demand and scarcity of timber supply. Demand for timber has risen during the coronavirus pandemic, due to an increased number of home renovations requiring timber as a building supply. Timber is used to build new pallets and repair existing pallets. So a shortage of timber has resulted in few new pallets being made, and existing pallets not being repaired.
COVID-19:
Within Victoria and New South Wales, parts of the manufacturing sector were closed during the COVID-19 restrictions for 2020 and 2021. This created challenges for new pallets to be made, even before there was a shortage of timber.
In conjunction with this, COVID-19 restrictions have forced businesses to close, so freight destined to a closed business can sometimes be held on pallets until the business reopens, and therefore is unable to be used. Existing pallets were stuck in warehouses, and there was not enough wood to build new pallets.
Hoarding:
Many businesses are fearful that pallet scarcity will prevent them from being able to operate at full capacity. To contest this, reports suggest that some businesses are retaining pallets, or moving them within their own supply chain to maintain supply, rather than returning pallets back to CHEP or Loscam for redistribution.
The number of pallets returning to Loscam depots dropped 50% in September 2021. This poses a safety risk, as CHEP and Loscam are responsible for inspecting and maintaining the quality and integrity of pallets. When pallets aren’t being returned to CHEP and Loscam depots, they cannot be inspected to ensure they are safe to use.
