Recently we reported on the latest jolt to the supply chain – the shortage of wooden pallets, which are crucial in the packaging, handling and storage of cargo around the nation.
CHEP Australia and Loscam, the two major operators of the country’s shared ‘pallet pool,’ say the shortage is caused by their customers amassing a backlog of pallets, as they stockpile goods in warehouses to guard against future supply chain disruptions.
CHEP (Commonwealth Handling Equipment Pool) is a subsidiary of Brambles, a global supply-chain logistics company that has around 350 million pallets circulating across more than 60 countries. Loscam is a private company whose named is based on its founders’ initials.
In today’s edition (18/08/2022) of the Courier Mail, the business department has run another story under the title Returns would be good for the pallet. In it, the CEO of Brambles expresses his hope that millions of wooden pallets being hoarded by customers in case of further shocks to the global supply chain will soon be returned, allowing him to chase new business for the first time in 18 months. He says that the transport and logistics industry could easily and immediately absorb as many as 6 million of its CHEP pallets if they were released back into the pool.
Late last year, in an article by the Australian Financial Review, the chief executive of supermarket giant Coles dubbed Australia’s supply chain crisis “pallet-gate.” As the AFR observed, you know something is serious when it gets the word “gate” tacked onto the end.
Customers are also moving pallets back and forth among themselves to safeguard their own supply lines, they say, rather than sending them back to CHEP and Loscam for redistribution in the shared pallet pool.
During July, Loscam issued an update online, saying, “Although we continue to invest heavily into growing the pool (of pallets), the demand is still outpacing our ability to source and convert timber into high quality pallets.” In their attempt to improve the situation they issued this plea to their clients, “We strongly encourage customers to dehire any Loscam pallets not in use to your nearest Loscam depot. By having pallets dehired and repaired we are ensuring their ongoing Fit-For-Purpose standard and fair supply to the entire market.”
Inventory stored on pallets in warehouses remains at an all-time high versus prior years, meaning the users are not returning them. Earlier this year CHEP’s general manager issued a statement online saying they expected supply chain disruption to continue throughout 2022, and their intention was to retain “elevated levels of safety stock in the foreseeable future.” To address the issue, they added, they have been working closely with their suppliers on ways to scale up their timber supply.
It now appears optimistic to believe the situation will be resolved this year and it is likely to continue on well into 2023.
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