May 4, 2021

Reports: Pallet shortage will continue, maybe into June

Pallet supplier CHEP is among the companies that have reached out to its customers regarding shortages of product along the supply chain.

Growers and industry leaders have confirmed a major pallet shortage across the country. Pallets are instrumental in a grower’s ability to ship their product from the farm to the store.

“Global supply chains have seen unprecedented and unpredictable shifts since the COVID-19 pandemic began over a year ago,” CHEP wrote in a recent communication to its customers. “Currently, as you are aware, there is an increase in inventory holdings across the supply chain due to the volatility in consumer demand. As a result, CHEP has seen sustained high levels of pallet demand from existing customers and inventory stockpiling throughout the U.S. In addition, our industry is faced with increasing constraints in transportation, labor and lumber (driven by an increase in construction and housing activity).

“CHEP is working around-the-clock to minimize disruptions in the supply chain and manage the effective flow of our pallet and other platforms.”

According to the National Watermelon Association, the pallet shortage will continue, possibly into June.

“As we reported two weeks ago, the country is experiencing a historic shortage of pallets that is causing the cancellation of some deliveries to growers and shippers,” a notice on the watermelon association’s website said.  “There is much confusion and angst surrounding this very significant issue, with cancellations, panic and anger all mixed together.  It is possibly the most significant (and threatening) issue that we have ever seen.

“CHEP indicated to us that this issue is ‘not’ just one industry (i.e. watermelon or any other fruit and vegetable crop), but rather spread across all industries and the entire country.  They have completely cut off their winter storage program and are shutting down their supply to companies that are either in arrears with their accounts and/or are normally “shoppers’”of pallets.  It was confirmed to me yesterday that they are ‘allocating’ pallets to their customers based on the available inventory in each area and are communicating regularly with them.  Additionally, they are accepting no new customers during this troubling period.

“They have talked with retailers and alerted them to the situation, and asked for all used pallets to be released back into the supply chain. No industry or grower or shipper is immune to this.  It is effecting everyone in the pallet-using business. Although the indication is that this situation could extend into June, more of the country is reopening from the shutdown period, which should loosen up the pallet situation from hoarder-buying and other COVID-19 purchasing effects. Let us hope (and pray) that it loosens up much earlier than that prediction.

“We reached out to our friends at 48forty, the largest white-board provider in the USA, and confirmed  the same difficult situation there.  No new customers can be accepted, and they are doing their best to supply their customers as best they can.  They too are short and may not be in a position to lend a helping hand.  The effects of COVID-19 on so many facets of our daily lives is truly making a huge & loud statement and challenging our efforts and your needs. CHEP indicated that you may be able to help them by ‘verifying’ the accuracy of your orders for this season, especially for the next few months.  We are not sure how much that will help, but anything might at this point.

“It has been reported that there are sheds with truckloads of pallets in states that will not be in production for 2-4 months.  And yes, that is true.  We were told that those pallets are part of the winter storage program (which has been cut off due to this situation).  Those pallets are paid for and will remain in the ‘custody’ of the grower/shipper that stores them (until they are used).  CHEP ‘cannot’ relocate or reallocate those pallets.  FYI.   They (CHEP) released a communication to their customers (yesterday) which touches on the higher points of the issue.  You can read it HERE, if you wish

“Where this very difficult situation will lead us is very unpredictable.  We will keep our regular contacts with CHEP, 48forty and any others (that will talk with us), while we keep you alerted of any solutions that may arise.  We very much look forward to the coming day when the supply loosens up, and we can return to some type of order in the business.  We’re heavily engaged and trying to help any way that we can.  Stay tuned, and stay strong.”