Supply chain challenges continue to impact pallets — the foundation of global freight transport

The foundation of bulk global shipping is quite simple — it’s all about the pallet. This stable, flat transport structure is topped with packaged goods that are secured by shrink wrap or straps. Pallets are lifted by forklift, front loader, or crane, stacked nicely, and then loaded onto trucks, trains, cargo ships, or airplanes for their global journey to market.

In fact, nearly two billion pallets are used every year in the U.S. to efficiently transport goods. Certainly, they facilitate the ease of transport — getting goods from Point A to Point B on schedule. But they also help preserve the integrity and high quality of goods being shipped. That’s important for all goods, but most critically for pharmaceuticals, given that any missteps could jeopardize the integrity of the entire shipment.

Pallets are a booming business. EMR’s research shows that the burgeoning global pallet market was valued at $82.59 billion in 2020 and will soar to nearly $115.17 billion by 2026. The use of pallets cuts loading time, enhances safety for workers, improves transport efficiency, and protects products.

“High-quality pallets are the linchpins for safely, efficiently moving everything from pharmaceuticals to fresh produce, machinery, chemicals, construction materials, and consumer goods to market,” says Yulieth Onofre, sales manager, Prospect Shippers Group, based in Miami. “Pallets make bulk shipping easier.”

2022 Pallet Challenges

That said, significant pallet challenges emerged throughout 2020 and 2021 and have carried into 2022. Most onerous? It’s the continuing shortage of pallets, which, in turn, is driving up pallet pricing. Shortages of new pallets – mostly made of wood — are attributable to everything from business labor woes and high lumber costs, to increases in new housing construction, an increase in consumer do-it-yourself projects, forest fires that cut down on logging efforts, and renewed lumber demand from overseas markets, among several other reasons.

Sometimes, big distribution centers and major retailers also get first dibs on new pallets, which can impact supply availability for other customers. “In addition, the rate of new pallet production simply isn’t keeping up with demand, and at the same time, fewer pallet “cores” or used pallets are available for sale,” says Onofre.

But she stresses: “Despite the litany of challenges, Prospect Shippers Group remains committed to helping our clients navigate through the current minefield of pallet shortages. We know that logistics managers within our clients’ companies have enough stressors to deal with in 2022 – everything from escalating prices for materials to product scarcity, delivery delays and increased client demand.” With all that in mind, Onofre offers a few “best practices tips” as regards to the pallet world in 2022.

Best Business Practices

Tip 1: It sounds simple but it’s paramount. Logistics managers must carefully assess their pallet quantity needs and communicate about those to their pallet supplier well in advance. “Last minute” is often no longer an option as it was several years ago. Plenty of advance notice during this era means that our customers will have the best chance of receiving the number of pallets they requested.

In addition, significant advance notice can help assure the size of pallets received remains consistent. That’s important for protecting cargo from external damage. For example, if pallets are inconsistent size-wise, the entire shipment could suffer with gradual damage along the edges and corners of the stack of boxes.

“For some products, even minor damage to the overall packing material is often considered as full-fledged damage to the entire shipment, even if the material within is untouched,” Onofre explains.

Tip 2: Be aware that new technology has created some new options for pallets. While an estimated 95 percent of all pallets are wood, plastic pallets and other choices exist too. Some wooden pallets may have protruding nails that can create the potential for punctures. Clients know that some products being shipped including pharmaceuticals or chemicals have ingredients that could prove harmful if exposed to air, so consider the use of new-technology plastic pallets as a possible option, depending on your specific shipment.

Tip 3: Be loyal when it comes to your pallet supplier. Focus on fostering a long-term relationship. Remember that any supplier’s challenges are exacerbated when customers make major, last-minute changes or when a client threatens to buy from a competing supplier to save a few pennies. Those tactics often fail to achieve the desired result. Treat pallet suppliers as you’d wish to be treated. Build a superb business relationship to protect the quality of your shipping materials’ supply chain.

Navigating through 2022

Pallet makers continue to be plagued by a lack of materials such as the wood for planks or steel for nails, as well as lack of workers at times. That’s caused supply chain shortages resulting in pricing spikes of several hundred percent. Sometimes the pallets (much as with storage cargo containers over the past two years) are simply located in the wrong part of the world to satisfy customer demand.

Yet, despite rising prices for pallets, Prospect Shippers is doing everything possible to hold the line on price increases including buying in bulk from pallet manufacturers. But the reality is that costs are soaring. Unfortunately, demand is currently exceeding supply. That may continue for several years.

Still, the global pallet market is expected to grow at a compound annual rate of about 5.4 percent between 2022 through 2027, according to EMR research. Pricing and availability will hopefully stabilize over time. But for the near term, why not talk to Prospect Shippers about your pallet needs.

One fact is clear, she notes: “Once, pallets were simply a corporate after-thought. They were also plentiful in supply. Today, they’re sometimes in short supply yet remain a vital resource needed for supply chain integrity. Since pallets ‘rule’ the bulk shipping world, working with a logistics firm such as Prospect Shippers Group that knows how to navigate the current marketplace challenges is vital. Our goal is to get your goods into the hands of consumers in a timely manner – which we know is so important for your business.”

About Prospect Shippers Group

One of four divisions of Prospect Shippers Group, an international logistics services conglomerate founded in Ecuador in 2001, Prospect Shippers serves to streamline, optimize, and expedite freight to and from the U.S. for a wide range of major industries.

With offices in Miami, New York, Los Angeles, Bogota, Quito, and Amsterdam, Prospect Shippers capitalizes on its long-time relationships with the major air carriers and ocean lines to offer competitive rates in securing ample space to destinations all around the world.

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