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Pallet problems add more costs to supply chain

With lumber prices many times higher than a year ago, wood pallets are more expensive and harder to find, adding cost along the fresh produce supply chain.

Lumber was as low as $260 per 1000 board feet on April 1, 2020, at the start of nationwide lockdowns, and prices got as high as $1,686 per 1000 board feed on May 7, 2021 before falling to $1,327 on May 17.

CHEP BB #:160353, one of the largest pallet companies in the world, addressed the prices on its website, explaining, “You are now paying 10 to 20% more to buy exchangeable wooden pallets than you were last year. What is more, you sometimes have to wait weeks for them to be delivered. What’s going on? Why has the price of wooden load carriers suddenly skyrocketed?”

The reasons include higher prices for pallet wood, less logging, fewer sawmills, higher demand from China, and more.

CHEP also sent a letter to supply chain partners explaining some of their actions to improve the problem, including growing the pallet pool, realigning staff for better support and increasing investment repairs.

Earlier this month, the Produce Marketing Association BB #:153708 sent an alert to members about the pallet shortage.

“PMA’s VP of Supply Chain and Sustainability, Ed Treacy has spoken to executives from CHEP USA and PECO Pallets and they both have reported their companies are facing challenges in supplying pallets to their customers.

Here is the situation:
1. There is a lumber shortage in the U.S. due to COVID shutting down the lumber mills for weeks.

2. The surge in new house and renovation construction is consuming most of the wood available from the mills.

3. The price for lumber is at an all-time high.

4. Distributors, wholesale and retail inventories are very high for nonperishable product to protect them from further supply chain disruption. That product is on pallets in their warehouses and distribution centers.

5. There is a shortage of all pallets, not just CHEP and PECO. White pallets (lower quality and not always rack-able) are not available as well.

6. Both CHEP and PECO Pallets reported that they are doing everything in their power to deal with this crisis.

All PMA members should plan on this situation not being resolved in the near term. Secure any pallet you can and inform your customers that they may receive their shipment on a non-preferred pallet until this situation is resolved.”

Greg Johnson is Director of Media Development for Blue Book Services