The latest challenge facing the logistics industry is a widespread pallet shortage. First detected in May, this dilemma has only accelerated with supply chain actors of every level being affected, including the consumer. The pallet shortage can partly be traced back to the recent surges in lumber prices and the continued increase of consumer spending. However, despite the fact that lumber prices have since fallen, in part due to consumers putting their DIY projects on hold, pallet prices are still record-high. Of course, companies want to keep pace with demand, but maintaining the same level of profitability is a struggle. Their increased expenses result in higher prices of consumer goods, leaving consumers having to spend more.
Canadian Alliance President Weighs In
“The shortage of pallets has rapidly increased forcing prices up as the volume of goods under load (palletized) is increasing.
The transpacific delays in cargo movements have forced suppliers to build inventories within Canada as a hedge against running out of stock. More stock on hand forces pallet demand up and pallet prices up.”- William McKinnon
Collection of Articles
May 28th – ABC
Pallet shortages were reported as early as May, “The pallet, surprisingly, is the secret lifeblood of logistics and distribution.” “This increased cost of packaging and transportation gets passed on to the consumer, particularly in industries like grocery for example that rely heavily on pallets and have tight margins to begin with.”
https://abc11.com/shipping-pallets-wood-price-increase-covid-19/10708198/
July 12th – Globe & Mail
The pallet industry is being affected by lumber availability and supply chain unpredictability. Pallet producers are saying that “while their revenue has skyrocketed, they are struggling to remain profitable.”
July 15th – Bloomberg
The lasting effect of soaring lumber cost, “on top of surging … movement of consumer goods turned the once-mundane shipping tool into a hot commodity. The spike is not only leading to hoarding, but also crime.”
June 20th – Supply Chain Dive
Pallet prices continue to rise despite lumber prices softening. “Companies are still clamoring for these pricier materials as they try to keep pace with heightened consumer spending”
June 20th – Financial Times
The FT is reporting the price of lumber is falling “as US consumers swap DIY for going out” however this may not last as “media reports of soaring prices had caused Americans to hold off buying lumber and pause their DIY projects, which they still intend to execute as working from home endures beyond the pandemic … It’s more demand deferral than destruction”
https://www.ft.com/content/38bedc2b-e605-4b7c-8f6e-9f61c398718c