'Acute' pallet shortages putting fresh produce supply at risk
The shortages are "acute," according to a letter to the North American produce industry signed by 19 industry groups, including United Fresh Produce Association and Western Growers.
The letter detailed a multitude of issues that are impacting pallet availability, including:
- Efforts of wholesalers, distributors and retailers to ensure sufficient inventory of non-perishables given previous pandemic-related impacts;
- Availability of lumber to repair and build new pallets;
- Escalating price of lumber when it is available;
- Nonperishable inventory dwell time increase; and
- Lack of available trucks to relocate pallets.
“The lack of pallets is adding stress to a supply chain that is already facing significant challenges, which include a lack of available trucks and shipping containers, ongoing labor challenges, fluctuating fuel costs, pandemic-related challenges and a pending shortage of resin used to make reusable containers and pallets,” according to the letter. “At this time, expectations are that the pallet shortage will continue for months, perhaps for the balance of 2021 – all at a time when many North American produce items are just beginning seasonal harvests and shipments.”
Listen to United Fresh’s John Hollay discuss this pallet issue with retail and Produce Market Guide editor Ashley Nickle in our Tip of the Iceberg podcast episode.
The issue has a wide and deep scope of negative impacts, according to United Fresh:
- The shortage of lumber and wood products has increased the cost of raw lumber 200% to 350% and is making the cost of wood pallets increase incrementally;
- In one example, in the past few weeks, pallet costs have increased more than 400%, if the pallets are even available, and often they are not;
- One farmer was told by one pallet supplier that they are not taking any new customers due to an inability to fill even existing customer demand;
- Companies are forced to bring pallets from other jurisdictions, thereby incurring border and transportation costs; and
- Pallets are being held in-house due to delayed and cancelled orders from pallet services, leading to higher storage charges and increased congestion within operations.
Company leaders along the supply chain need to collaborate to balance organizational goals relative to overall availability of goods with availability of food.
“If there is not a concerted effort across the supply chain to ensure pallet availability for shipment of produce, there is little doubt that it will be very difficult, if not impossible, for the grower-shipper community to meet buyer, and ultimately consumer, demand for produce,” according to the letter.
Also, growers and shippers are trying to comply with pallet requirement specifications, but this is even more challenging.
The industry groups’ stance is that temporary modifications or exceptions to pallet requirements — as long as those exceptions don’t jeopardize safety — would help greatly until this pallet shortage is resolved.
All partners in the supply chain should have regular conversations with their pallet suppliers to understand the situation and pallet inventories and availability, according to the release.
“We welcome the opportunity to work collaboratively with all parties within the supply chain to mitigate the impacts of the current shortages and will reach out to stakeholders to identify a path forward that provides solutions to this increasingly disruptive threat and enables the continued flow of goods,” according to the letter.
Besides United Fresh and Western Growers, organizations that signed the letter include:
- British Columbia Produce Marketing Association
- California Strawberry Commission
- Canadian Horticultural Council
- Canadian Produce Marketing Association
- Fruit and Vegetable Dispute Resolution Corp.
- Florida Fruit and Vegetable Association
- Florida Tomatoes
- Fresh Produce Association of the Americas
- Northwest Horticultural Council
- Ontario Fruit and Vegetable Growers' Association
- Ontario Greenhouse Vegetable Growers
- Ontario Produce Marketing Association
- Produce Marketing Association
- Quebec Produce Marketing Association
- Texas International Produce Marketing Association
- Toronto Wholesale Produce Association
- Washington State Tree Fruit Association
Learn more details with this interview.
