Australia tackles last supply chain problem – missing pallets

SYDNEY, October 28 (Reuters) – The Australian supermarket industry has formed a task force to address a shortage of delivery pallets that could impact the availability of some goods, another node in the supply chain global economic recovery after the pandemic.

Woolworths Group Ltd (WOW.AX) and Coles Group Ltd (COL.AX), the two leading grocers, have joined pallet makers and smaller chains to address shortage of wooden crates resulting from COVID-19 lockdowns and wood shortages, said the Australian Food and Grocery Council (AFGC), which manages the project.

Pallets join a growing list of products suffering from raw material shortages. Consumer goods manufacturers and retailers have also reported a shortage of plastics and other packaging materials such as cans and glass, while the lack of computer chips is hurting automakers around the world.

Although the two grocers have said they will avoid empty shelves during the holiday season, the coordinated measure shows how a mix of unusual factors stemming from the COVID-19 pandemic has strained the company. 120 billion Australian dollars (90 billion dollars) industry. .

Without pallets, manufacturers cannot ship goods to warehouses, which can lead to production stoppages and less goods to sell. There are signs that some companies are hanging onto pallets rather than recycling them.

Brambles Ltd (BXB.AX), one of the world’s largest pallet suppliers, said earlier this year that labor and transportation constraints, coupled with restricted access to manufacturing sites due to of COVID, deterred some manufacturers and retailers from returning pallets.

Robust home construction and renovation markets, particularly in the United States, have also squeezed lumber supply and pushed up prices.

PALLET HOLDER

Earlier this month, beer maker Corona Constellation Brands said the increase in raw material costs in the third quarter was mainly due to pallets, cartons and aluminum.

Coca-Cola (KO.N) said on Wednesday it was facing “tight” supplies of cans, while rival Pepsico (PEP.O) reported difficulties obtaining bottles for its Gatorade sports drink. Read more

“Across the country there is a bit of ‘pallet racking’ going on,” Coles chief executive Steven Cain said on a earnings conference call. “The lack of wood means that little new wood is being produced. “

A Woolworths spokesperson said the company was working with suppliers to “help them gain access to pallets and minimize impacts within their distribution networks.”

In a earnings call a day earlier, Woolworths CEO Brad Banducci said his company, which together with Coles accounts for two-thirds of Australian supermarket sales, may have to replace some brands of certain items in due to supply problems, although it is not declining. entire product categories.

“They are probably feeling this boost effect, where there is a shock in one node in the supply chain and that causes amplified reactions in all the other nodes,” said Shanaka Jayasinghe, director of GRA Supply Chain, a logistics consulting company.

($ 1 = AU $ 1.3319)

Reporting by Byron Kaye and Siddharth Cavale; Editing by Stephen Coates, Keith Weir and Jan Harvey

Our Standards: The Thomson Reuters Trust Principles.