A pallets shortage across Australia is interrupting production schedules at some food and grocery suppliers and the Australian Food and Grocery Council (AFGC) says it could disrupt Christmas and post-holiday deliveries. Source: Inside FMCG
Déjà vu? Yes, because the same shortage happened last year after Covid disrupted the supply chain, leaving pallets stranded in factories and wharves.
Yet, despite having 12 months to prepare, the $133 billion FMCG sector has again raised fears that there might not be enough pallets to transport their goods, with older pallets breaking and taking too long to repair.
AFGC CEO Tanya Barden says Chep, the world’s largest pallet supplier, should be held accountable for failing to keep up with the supply when the demand has been increasing for years.
“I think Chep has fundamentally misread the demand for pallets in the market,” Barden told The Australian.
“About 70% of pallets are used in fast-moving consumer goods to move products along the supply chain, and the pallet pool has been broken for the past 12 months. Companies are only receiving about 10% to 15% of their pallets from the poolers, Chep and Loscam.”
Lis Mannes, GM at Chep Australia, responded that for the past two years, the company engaged with customers to discuss their pallet needs and invested more than $100 million to increase its pallet pool.
“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,” Mannes told The Australian.
Barden says she also reached out to newly appointed Australian Competition & Consumer Commission chair Gina Cass-Gottlieb last month about the pallet problem and has alerted the office of federal industry minister Ed Husic to the imminent danger to supply chains of the “dwindling pallet pool.”
A spokesperson from ACCC confirmed the regulator was aware of the pallet shortage issue.
“There has been a range of media reports about shortages in the pallet sector. The ACCC will continue to engage with key stakeholders on this issue,” it said.
A spokesperson for Husic’s department responded it would engage with stakeholders on the pallet problem.
A range of issues could have disrupted pallet supply, reports The Australian, including wood shortages, increased timber costs, and legal action by environmentalists that “halt logging” in key local forests that are a crucial source of pallet wood.
However, while traditional pallets are made from wood, they can also be made from materials like plastic, steel, and even recycled plastic or corrugated paper.
FMCG asked a representative from AFGC for a statement on why nothing has improved after having a year to prepare. The organisation replied: “There’s no comment at this stage.”
