Pallet shortage puts essential goods supply in jeopardy

With Christmas just around the corner, Australian small and medium businesses are facing the possibility that the national pallet shortage could jeopardise the delivery of essential consumer goods to their stores, including groceries and food.

According to a report from The Australian, there are growing fears in the industry that Australia will be hit by a pallet crisis after Christmas, as shortages of the commonly used transport items mean suppliers are struggling to get enough pallets to transport their goods. At the same time, older pallets are breaking from overuse and repair times have blown out. 

Last month, Australian Food and Grocery Council CEO Tanya Barden raised the concerns of food and grocery suppliers about the pallet shortage with Australian Competition and Consumer Commission (ACCC) chair Gina Cass-Gottlieb, as well as the office of federal Industry Minister Ed Husic.

Barden has also spoken with the federal government’s Office of Supply Chain Resilience, which was created in 2021 to focus on critical supply chain vulnerabilities that affect Australia’s national interest, about the $133 billion food and grocery sector’s increasing concerns about the current pallet supply. 

According to the Food and Grocery Code Independent Reviewer’s annual report 2020-2021, the food and grocery industry in Australia is highly concentrated, with the four largest players — Woolworths, Coles, Aldi and Metcash — accounting for over 80% of the market share. 

On the supply side, food and grocery manufacturing businesses range from multinational corporations with a host of brands to small family-owned businesses with a single product line. 

From 2019 to 2020, the industry was made up of more than 16,000 businesses, employing more than 270,000 people and contributing $132.7 billion to the Australian food and grocery manufacturing sector.

Barden says more pallets needed to be added to the pool. 

“I think we are really seeing a market failure at the moment and there is a need for an injection of more pallets into the pool, so there is a question as to whether state or federal governments are able to collaborate to firm up some timber supplies or pallet supplies, and that is part of the discussions we are having,” she said. 

“There is a market here that is not working effectively.

“Supply chains are fundamentally operating differently to what they have in the past, and so the demand for pallets is higher because of all that uncertainty. And unfortunately, we think the pallet poolers have left it late to invest in supply into the Australian market.”

An ACCC spokesperson confirmed the regulator is aware of the pallet shortage issue.

“There has been a range of media reports about shortages in the pallet sector. The ACCC will continue to engage with key stakeholders on this issue,” they told SmartCompany.

A spokesman for Husic’s department also said it would engage with stakeholders on the pallet issue.

“The Department of Industry, Science and Resources is aware of industry representations regarding pallet availability,” he said. 

“The department continues to engage with all relevant stakeholders on the matter.”