What’s going on with Chep pallets?

From new cars to champagne, shortages have affected our lives in 2022.?

Some of the interruptions to normal supplies have been caused by floods, which destroyed crops and affected availability. The weather also wreaked havoc on roads and made it difficult for transport vehicles to reach their destinations.?

International shipping went out of balance, with increased demand on suppliers and challenges in relation to the return of ships and containers to their starting places. This has resulted in long waits for ships to reach ports and stacks of containers sitting empty in places including Australia and the USA.?

The other shortage which has really affected businesses in 2022 is pallets.?

What’s going on with pallets??

Simple but essential, wooden pallets are used to transport almost every type of small good, from electronics to vegetables.?

At the moment, suppliers are reported to be increasingly anxious about running out. If they do, it will make it very difficult for goods to travel from the warehouse to retailers and into the hands of customers.?

Current shortages have been caused by:?

• A lack of timber resources to make new pallets (a recent court decision banned logging in key parts of Gippsland, which has had a ‘knock on’ effect for pallet suppliers)
• An imbalance global supply chain
• Older pallets breaking down because they are being repeatedly used without being serviced
• Some suppliers ‘hoarding pallets’ because they are worried about not having enough
• The unpredictability of the pandemic and the impact it had on retail trends

One of the biggest suppliers of pallets in Australia is called Chep. It recently urged businesses to return pallets instead of holding onto them, so they can be repaired and returned to operators in useful condition.?

Meanwhile, Chep is facing pressure for increasing its prices, which are reportedly now 60-70 per cent higher for end users. The provider claims it has needed to change pricing in order to keep up with the rising cost of timber.?

What’s the solution??

There isn’t an easy answer to this problem at this time because of the gaps between supply and demand.??

A recent article from Channel News said that “Those who can compromise on size and specification will adapt most easily but many automated storage and order picking systems rely on a specific pallet design, where it will be much more difficult to source a standard pallet size.”

Critics of Chep say they should have been more aware of the rising demand for pallets in the market and invested in increasing the pool earlier. However, CHEP Australia General Manager Lis Mannes has been quoted as saying CHEP had engaged on an ongoing basis with customers to discuss their pallet needs and has invested more than $100m during this period to increase its pallet pool.

According to a spokesperson, “There are now materially more CHEP pallets in the market than this time last year, more than pre-pandemic, and more than in CHEP’s 70-year history.”

Chep has stated it added as many pallets to its pool in the six months leading up to Christmas this year as it normally does in a year, and that it will increase the size of its pallet pool in 2023 to address the shortages. ?

In the meantime, Smart Company reported that the Australian Competition and Consumer Commission is engaging with key stakeholders on the issue.?

There is also a movement towards plastic pallets, as reported in this recent article from packagingeurope.?

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