Pallet Shortage Threatens Produce Industry Supply Chain

The U.S. produce industry has sounded the alarm over the current acute pallet shortages, which threatens to disrupt the supply chain, causing a reduction in produce availability to consumers and increased prices.

In a message to its members, the United Fresh Produce Association said, “We believe that many do not yet realize the factors impacting the situation and the potential scope of the issue.”

The Produce Marketing Association (PMA) also alerted its associates to the severe problem. “There is currently a shortage of all types of pallets available for rent or sale in the U.S. This is not unique to just the produce and floral industry,” said Ed Treacy, PMA Vice President of Supply Chain and Sustainability.

According to United Fresh, the pallet shortage 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. 

At this point, the pallet shortage will continue for months, perhaps through the remainder of 2021, all at a time when many North American produce items are just beginning seasonal harvests and shipments. 

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A pallet is an indispensable tool in the various processes that are part of the supply chain, from transportation to warehousing. It is a platform, usually made of wooden slats or other materials such as plastic, metal, or cardboard.

This platform allows the goods to be grouped on it, constituting a standard, safe and efficient loading unit. Furthermore, the use of pallets allows the handling and distribution of goods from the origin to the final destination.

Pallet availability is affected by several factors, including:

  • Efforts of wholesalers, distributors, and retailers to ensure sufficient inventory of non-perishables given previous pandemic-related impacts.
  • The availability of lumber to repair and build new pallets.
  • The escalating price of lumber when it is available.
  • Non-perishable inventory dwells time increase.
  • Lack of available trucks to relocate pallets.

To provide a sample of the scope of the problem, United Fresh highlighted the following information:

  • The shortage of lumber and wood products has increased the cost of raw lumber by 200% to 350% and makes wood pallets increase incrementally.
  • As an example, it was noted that over the past few weeks, pallet costs had 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 in pallets from other jurisdictions, incurring border and transportation costs.
  • Pallets are being held in-house due to delayed and canceled orders from pallet services, leading to higher storage charges and increased congestion within operations.

Working together, the supply chain must balance the organization’s goals for the overall availability of goods with food availability. 

Without a concerted effort throughout the supply chain to ensure the availability of pallets for shipping produce, there is no doubt that it will be very difficult, if not impossible, for the producer and shipping community to meet the demand for produce from buyers and, ultimately, consumers, United Fresh and PMA warned. 

At the same time, producers and shippers are striving to remain compliant with pallet requirement specifications as much as possible, but this is proving challenging. Therefore, temporary modifications or exceptions to pallet requirements, as long as they do not jeopardize safety, would be advantageous until this pallet shortage is resolved.

The produce associations said they are committed “to identify a path forward that provides solutions to this increasingly disruptive threat and enables the continued flow of goods.”