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Chronic pallet shortage adds to supply chain woes

pallets

As if the global shortage of urea wasn’t bad enough for the supply chain, the road freight industry is also now dealing with a chronic dearth of pallets.

Reports suggest that customers are moving pallets back and forth among themselves to safeguard their own supply lines, rather then sending them back to CHEP and Loscam for redistribution.

Road Freight NSW CEO Simon O’Hara said the issue is now so rampant in the state that members are having to turn down work, or insist clients supply their own pallets.

“You just can’t get them. They’re all in warehouses and they’re being used,” said Simon O’Hara, CEO of Road Freight NSW.

“Woolies and Coles have actually set up their own internal economies with Chep and Loscam pallets which means that they don’t lose them.

“But everyone is doing it, it’s not just them.

“I’ve got one member who couldn’t do a load because he just couldn’t get a pallet anywhere.”

Formula Chemicals director Leigh Smart said the situation is so dire that when companies place an order for 40 pallets of product, they have to supply the 40 pallets or he can’t fulfill the order.

“Some buggers are hoarding pallets and for what reason, we don’t know,” said Smart.

“Someone has got wind of something that makes them think pallets are in short supply, and once you put a run on it, everyone goes and gets themselves 2-300 pallets and puts them in their backyard.”

CHEP Australia managing director Lis Mannes estimated her customers were holding the equivalent of one month’s extra stock in warehouses ahead of Christmas compared to last year.

“A short-term consequence of this is that… substantially fewer pallets are returning to our service centres for onward supply,” Mannes said in a statement.

CHEP had contacted all of its customers to request “urgent co-operation and support in addressing this issue”, she said, and was working with supermarkets and the Australian Food and Grocery Council on the problem.

The letter CHEP sent to customers last week said there was also a “a growing trend to both hoard pallets” and “circumvent the usual flows in the shared pooling model” by sending them between themselves.

The Sydney Morning Herald also reported that Daniel Bunnet, the local executive vice president of Loscam, said the number of pallets being returned to its depots dropped almost 50 per cent in September.

“Over the past few months we have witnessed a significant increase in pallet sharing among our customers,” he said in a recent letter sent to customers.

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