When it comes to both cargo pallets and empty shipping containers, ever since the start of the Covid pandemic four years ago we have found ourselves reporting variously on their shortage, oversupply or – more commonly – being situated in the wrong location to where they are needed. The latter case became most apparent as the Red Sea crisis unfolded at the beginning of 2024.
Demand for shipping pallets has fallen this year, as reflected in a drop in Brambles share prices at the end of April. In what has been termed “inventory optimisation,” the demand is down while customers destock pallets they hoarded over the pandemic due to supply chain issues.
A report titled “Wood Pallet Market Summary 2024-2031” was posted on LinkedIn in February this year. It announced that “The global Wood Pallet market size was valued at USD 87867.53 million in 2023 and is expected to expand at a CAGR [Compound Annual Growth Rate] of 7.17% during the forecast period, reaching USD 133163.4 million by 2031.” So, the pallet industry continues to grow. There is just a temporary drop in demand now that a lot of units have been repositioned.
About three million additional pallets were reported across the Brambles network during the first quarter of 2024. Chief Executive Graham Chipchase said that investors may not have fully appreciated the extent to which their increasing digitization of its pallet-pool monitoring had helped speed returns. The market might instead see the returns as a natural consequence of easing supply chains, he told The Wall Street Journal.
Brambles’ revenue in the US and Europe is mostly derived from issuing a pallet to a customer as opposed to time on issue. As such, pallets languishing with these customers provide no ongoing revenue and the firm needs to replace lost stock to maintain its pallet pool. Consequently, more pallet returns are a boon, because pallet replacement represents most of the firm’s capital expenses.
As we have pointed out before, wooden pallets will face an increasing challenge into the future from reusable plastic pallets, which have an average lifetime of 10 years. This alternative has its critics, however, who point out that the world ought to be producing less plastic, not more, and that sliding or dragging plastic over metal surfaces such as the trays of trucks or the floor of metal containers can create the hazard of static electricity.
Only a month ago, CHEP posted a new You Tube video with the narrative: “Pallet pooling is our circular business model of renting pallets on demand—so you have the pallets you need when you need them. Share, repair and reuse pallet pooling is only one of the supply chain solutions we offer.”
CHEP Australia and LOSCAM are the two major operators of Australia’s shared ‘pallet pool.’
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.
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