Large enterprises and smaller e-commerce stores alike are feeling the effects of the global pallet shortage. Without sufficient pallets available on an ongoing basis for businesses to rely on when shipping products, it’s difficult for companies to meet their sales objectives and address consumer demand.
That’s especially problematic for organizations that are now launching a new or improved product and are trying to make sure their orders are fulfilled in a timely manner.
Whether the problem is moving components around through the supply chain to build items or transporting the finished products to a warehouse or port, pallets are needed every step of the way.
The Global Pallet Shortage in Context
For perspective, the pallet shortage that businesses are feeling all around the world has to do with a cost and supply problem. Red Stag Fulfillment reports that researchers estimate wood pallet costs have risen 400%, with some of this increase due to robust movement in lumber rates. “Pallet makers and sellers will need to recoup their costs and address a shortage that is lagging overall lumber availability.”
With the higher prices, manufacturers have been keeping their pallets for much longer than usual. That’s because they are not selling their stock at the usual rate. Some businesses have been buying more stock than usual because of existing supply chain shortages as well as delays from container shippers.
When containers are sitting at the dock for longer periods than they take to actually move across the ocean, it signals to companies that they need to be careful and conservative in how they address the goods they buy and store. Otherwise, their failures to plan for customer demand could mean a big hit to their bottom line. It’s easy to see how pallets go out of circulation even more under such circumstances.
A Green Solution?
The growth in pallet prices does echo growing concerns of companies about how to address pallet scarcity and the resulting price increases.
One response to this problem may come from efforts by businesses to “go green” and do more to conserve the planet’s natural resources.
As researchers reported in the journal Heliyon, “Pallets are crucial in the logistics infrastructure system of various industries and manufacturing companies.” Despite typically being made of wood, pallets still can wind up in landfills instead of users recycling them.
For a solution, the researchers note that manufacturers are testing pallets made out of recycled paper pulp, which is laminated and glued into layers.
Another approach is to make recycled pallets out of wood waste and scraps. And by emphasizing reuse, companies may be encouraged to hold onto pallets to employ again instead of discarding them.
Partnering With 3PL Experts as You Contend with the Pallet Shortage
Dealing with the current pallet supply shortage will likely affect your business in some unpredictable ways. To smooth out the potential bumps in the road, it makes sense to partner with the logistics and warehousing professionals at American Warehouse, Inc.
For more information about how our storage facilities can benefit your organization in light of the pallet crisis, get in touch with us today.