Navigating The National Pallet Shortage
Are you feeling the pinch of the national pallet shortage? You are not alone. Due to the ongoing repercussions of the months of downtime due to the COVID pandemic, companies continue to struggle with acquiring various goods.
From semiconductors to various types of food, companies everywhere have problems sourcing the items they need to run their business.
And when it comes to the pallet industry, the same tune is being sung. Countless businesses struggle to find the pallets they need to secure, transport and store proper product inventories.
But, what is the cause of this? How can companies like yours manage the shortage, and what workarounds can be obtained to help combat the lack of pallets available today?
This article will explain the national pallet shortage, what is causing it, and ways you may be able to navigate these problems and source the pallets you need.
What Is The National Pallet Shortage?
Companies all over the county are trying to source the pallets that they need to secure their products for transportation and storage. But, many companies are struggling to get the pallets they need.
Many companies are seeking new pallet vendors as the vendors they have been using for decades are struggling to meet the demand of their current customer base.
As such, many pallet vendors are not taking on new clients and are having difficulty supplying their core customer base as well.
What Is Causing The National Pallet Shortage?
While COVID was a big player in the events that caused the national pallet shortage, it is not the only thing contributing to this ongoing problem.
Elements that have contributed to the creation and sustaining of the national pallet shortage we are seeing today have been caused in part by:
- Pallet rental companies rationing supplies
- Manufacturers and distributors increasing pallet inventory
- Lumber shortage and price increases
- Labor shortages
- Gas prices
- Inventory dwell time increases
- Lack of trucks
- Shipping container problems
- Resin Shortages
Each item listed above is a major contributing factor to the national pallet shortage. In the section below, we will explore each of these items in more detail to help clarify the main issues causing the national lack of pallets.
Pallet Rental Companies Rationing Supplies
In the pallet industry, there are countless pallet manufacturers and retailers. When it comes to companies that rent pallets to their clients rather than sell them, there are three major players.
According to industry protocols, these players are supposed to keep the inventory of rental pallets at a specific level by adding new stock as needed.
One of the major players in this game is not generating the required number of pallets to meet their customer's requirements.
Instead, they tell many clients they must ration their pallets as necessary. So, if a client requires one million pallets for the year, they are told they will get 700,000 and need to make do.
Many clients of pallet renters who are telling their customers they must ration their pallets are not happy with this.
As such, thousands of companies are leaving these rental companies and are going to pallet manufacturers and retailers seeking help but finding none.
With most pallet manufacturers unable to take on new clients, they have no choice but to turn away thousands of new customers, many of which end up without the pallets they need to run their business.
Manufacturers And Distributors Increasing Pallet Inventory
Many manufacturing and distribution companies for all kinds of products, including food and consumer goods, are stocking up on pallets to negate further impact of the shortage.
With so many companies trying to buy larger quantities of pallets, supply levels are dropping from pallet vendors all over the country.
This makes it hard for many businesses to acquire the pallets needed to secure, transport, and store their products safely.
A National Lumber Shortage Means Extended Pallet Shortages
Back in April of 2021, the cost of lumber had increased over 400% from what they were the year prior. This was due to a rising lumber shortage, making it hard for pallet manufacturers to source the primary raw material they need to produce pallets.
The lumber shortage, which peaked in 2021 and has only slightly improved up to the current day, was caused by several factors.
The first factor was a boom in the housing market. When the COVID pandemic hit in 2020, many homeowners who were planning on selling their homes feared the event might lead to a crash in the housing market.
However, the exact opposite occurred. With many companies shutting down for six months or more, many people switched their focus from work to purchasing or building new homes, while others invested a lot of time and money in significant home improvement projects.
While demand skyrocketed for lumber, many sawmills and logging companies were shut down or running on skeleton crews. As such, the supply of lumber was drastically depleted over the next year.
2022 saw much of the same until April, when prices dropped from March at $1,733 per thousand board feet down to $829. While current prices are the lowest we have seen this year, the current cost of lumber is still higher than the highest cost of 2020.
Labor Shortage For Pallet Production
Like almost every other industry in the country, the pallet manufacturing industry was hit hard with massive downtime during the pandemic.
After months of shutdowns, many logging companies and sawmills could not find quality labor for their facilities.
As a byproduct of the great resignation and related variables, many sawmill and logging laborers decided not to return to the workforce, with many people living on unemployment for months.
With super high demand and historically low availability for quality labor, the lumber industry and related businesses are trying to tackle months of back orders while still battling labor issues.
Gas Prices Increase Cost Of Pallets
Thanks primarily to the war in Ukraine, gas prices have risen significantly since the start of the conflict. And for now, it looks like this trend will only continue.
When gas prices go up, so does the cost of everything else, including pallets. This is because the pallet manufacturer's suppliers for lumber add a gas surcharge to their products to cover the cost increases for transportation.
And pallet manufacturers also add gas surcharges to cover that cost for themselves. This is fairly standard protocol across the board for most companies that produce physical products.
Inventory Dwell Time Increases For Products On Pallets
Tens of thousands of companies across the nation are working hard to expand product inventory to meet the demands of consumers now and in the future.
Because of this, pallets are sitting in storage for much longer than they were before. As such, these pallets are not returning to the market as quickly as they once did.
With pallet manufacturers already struggling to meet months of back orders for their current customers and often unable to fill new client's orders, this only compounds the situation.
Lack Of Trucks To Transport Products On Pallets
Truckers are in short supply these days, and that is making it difficult to get orders fulfilled on time. As such, pallets are being used for more extended periods than before, causing further stress on the pallet industry.
This is primarily due to the trucker protests taking place in recent history in both Canada and the USA. The protests shut down major supply chain routes for days on end, exacerbating an already burdened supply chain and pushing back orders even further into the future for many companies.
In addition to the trucker protests, there has been a significant shortage of truckers for the past couple of years that has still not been resolved.
The shortage is due to many truckers refusing to work, staying on unemployment benefits, or taking time off from returning to the road.
These issues are taking place as many truckers feel that while demand for their skills is at an all-time high, the quality of life and work related to their skill sets is at an all-time low.
Many truckers feel that they are not valued by their employers, who are pushing them to their breaking points without providing an incentive for doing so.
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Shipping Container Problems For Pallets
To this day, there are major clogs of container ships sitting in ports for weeks, sometimes months on end at ports around the globe.
This congestion is primarily a byproduct of the COVID pandemic, which continues to flare up in countries around the world, often leading to more week or month-long shutdowns before business returns to normal.
Because of this, containers filled with pallets of products go unloaded for multiple months. This puts even more strain on the already low availability of pallets across the country.
Plastic Resin Shortages
As plastic resin is a byproduct of the petroleum industry, any time gas prices go up, so does the cost of plastic. With the rise of international conflict between Russia and Ukraine, gas prices have skyrocketed and continue to climb.
With Russia being one of the world's major players in the petroleum industry, this is expected to continue in the coming months.
With the ever-rising cost of gas, resin prices will continue to increase. With high demand for plastic resins and low availability, many resin manufacturers are not taking new orders as they struggle to meet months of back orders for their core customer base.
As many pallets are made with plastic (such as certain rental pallets), these shortages add unwanted headaches to an already stressed pallet supply chain.
How To Navigate The National Pallet Shortage
I know this is a lot to take in. And it may seem like too much doom and gloom. But, there are things that you can do as a company that may allow you to navigate the national pallet shortage and find some or even all of the pallets you need.
The things that you can do as a company to get around the problems surrounding the national pallet shortage and acquire the pallets you need include:
- Understanding the "ABCs" of pallets
- Sourcing pallet vendors
- Renting Pallets
- Buy Recycled pallets
- Buy Remanufactured pallets
- Buy New Pallets
- Using professional and personal networks to find pallets
In the section below, we will provide more detail and dig deeper into each of the recommendations above. With the information here, you will be armed with tools that may help you acquire the pallets you need but have yet to find.
Understanding The "ABCs" Of Pallets
When you are looking to buy pallets, you have three different types of pallets to choose from. These include A pallets, B pallets, and C pallets.
Below we will provide a more in-depth description of each category of pallets mentioned above.
- A Pallets - A Pallets look like they are (or are) brand new. These pallets are made from newer or new softwood lumber and nails and have been used very little or not at all. Of the three types of pallets mentioned in this section, these pallets are the strongest and most robust of the pallets mentioned. These are the most expensive pallets on this list.
- B Pallets - B Pallets are not brand new pallets, but they are not old either. While they have been used for a while, they are still in good condition. While some B pallets will have the occasional dent, ding, or chip, they are still strong enough to handle most loads. These pallets cost somewhere between the cost of an A pallet and a C pallet.
- C Pallets - C Pallets have been put through their paces. They have been used countless times and have seen an extensive amount of action out in the field. C pallets may range from OK condition to lousy condition. An order of C pallets will likely have a few pallets that may be unusable without repair. These are the cheapest pallets you can buy.
Each of the pallets mentioned above will have its own pros and cons. During these times, availability may be an issue for all three varieties.
That said, depending on your geographical location, you may be located near a vendor who will have more extensive availability of one type of pallet or another.
Sourcing Pallet Vendors
If your current pallet vendor cannot meet your needs, you have a couple of different options. You can try to source a new pallet vendor.
Ways in which you can source a new pallet vendor include researching pallet vendors online with search engines such as Google or supplier discovery websites like thomasnet.com.
You may also want to consider contacting your customers and vendors to see who they are using as a pallet vendor.
By leveraging your customer and vendor base, you may be able to find a new pallet vendor within these communities who can meet your needs.
As a second option, you may want to contact pallet vendors you have previously used but had decided to move on from.
If you have a list of previous vendors you used but no longer do for one reason or another, now may be a good time to revisit these pallet vendors.
With the current availability of pallets, it may be worth buying from a secondary vendor who did not meet all your needs and expectations if they happen to have a more extensive inventory of pallets than your go-to choice.
Another option you have is to rent pallets from a pallet rental company. Pallet rental companies often have massive inventories of pallets for rent.
Depending on your chosen company, you may be able to identify a pallet rental company that can supply you with the pallets you need.
Depending on how you currently buy pallets, renting may cost more per pallet in today's climate but may allow you to get the pallets you are seeking but have yet to find.
That said, it is essential to note the second section in this article discussing the rationing that some pallet rental companies are doing.
You will want to ensure that any pallet rental company you choose to work with does not ration the pallets they have to their customers but can fill a complete order as needed.
If the rental company you are working with cannot do this, you will want to look elsewhere.
Buy Recycled Pallets
When choosing a type of pallet to buy, recycled pallets are popular these days. With lumber costs being very high and availability being very low, recycled pallets are, for the most part, much easier to obtain than new pallets.
Recycled pallets are used pallets that have been damaged and then repaired. Recycled pallets will continue to be recycled until the damage is so severe that they can no longer be recycled.
As such, newly recycled pallets are usually in better condition than recycled pallets that have already been recycled multiple times. With that being said, when you order recycled pallets, chances are, you will receive a selection of both in your order.
Almost all recycled pallets are 48 x 40 pallets (also known as standard or GMA pallets). If you are looking for custom-sized pallets, recycled pallets are not a good option for you.
The most significant advantage to buying recycled pallets is cost savings. Generally speaking, recycled pallets will cost around 70% less than new pallets and about 50% less than remanufactured pallets.
The downside is that there are some pretty significant disadvantages to buying recycled pallets. These include items such as:
- Pallets that don't have full-length deck boards that are often in rough condition and made from two older deck boards that have been nailed together.
- Some recyclers will obtain and then resell pallets without doing any repair work before reselling them.
- Pallets failing during transit resulting in damaged goods or total loss of the palleted products.
- Loose or damaged fasteners.
- A steady decline in pallet quality from one order to the next.
Depending on the quality of the recycled pallet vendor you choose to buy from, you may experience a little or a lot of the items listed above.
Basically, unless you know your pallet recycling vendor is a great company, you are gambling with the quality and safety of your pallets when sourcing recycled pallets.
When reviewing a recycled pallet vendor, be sure to read online reviews and check their score with the Better Business Bureau.
Buy Remanufactured Pallets
Your next option is to purchase remanufactured pallets. Remanufactured pallets are pallets that are made from reclaimed pallet parts.
Sometimes, you may be lucky enough to find a remanufactured pallet vendor who uses both reclaimed pallet parts and new lumber to remanufacture their pallets.
This is the best-case scenario when buying remanufactured pallets for your product palletizing, storing, and transportation.
You can purchase remanufactured pallets in a variety of sizes. So, if you need multiple different sizes of pallets for your products, remanufactured pallets may be a great fit for you.
Remanufactured pallets can save you up to 40% over buying new pallets. And, if you choose a good vendor, you can sometimes get pallets that are as good as new. At least from a strength perspective anyway.
Aesthetically speaking, remanufactured pallets are not very good. They can be pretty ugly as they are often dotted with holes, discoloration, mold, paint, tar, and grease.
But, if you don't need your pallets to be pretty, remanufactured pallets are a great way to get a quality pallet for a fraction of the cost of new.
As most of the wood in remanufactured pallets is collected from recycled pallets that have reached the end of life, you have to choose a vendor you can trust that will only use the best parts from older pallets for their remanufacturing process.
Always read online reviews of the vendors you are considering, and check out their Better Business Bureau rating.
Buy New Pallets
Finally, we come to new pallets. From a quality perspective, new pallets are the best pallets you can buy. New pallets are made from brand new lumber and are available in both softwood and hardwood configurations.
New pallets are the most aesthetically pleasing on this list and are the most robust and rugged pallets you can get.
With that being said, new pallets are the most expensive. And, as there is an ongoing national lumber shortage, you may not be able to find a new pallet vendor who is taking on new clients.
And if you do, you can expect to pay a super-premium price.
Using Professional And Personal Networks To Find Pallets
Finally, one thing you can do to increase the probability of getting pallets when you are having a hard time is turn to your professional and personal networks.
Consider reaching out to your business contacts to see who they use for their pallet needs. Ask around at professional events where people are getting their pallets from.
If you are on social media, use your personal social media networks to connect with your friends and family to find out if any of the companies they work for have a good pallet vendor.
You can also search your social media networks for keywords like "pallets" and review the posts and articles that come up in the feed.
You just might be able to find a lead for a new pallet vendor by doing so.
When You Have Found A Pallet Vendor
With the information in this article, you should have everything you need to understand and navigate the national pallet shortage.
And, with the tools above, you have a great shot at finding a new pallet vendor for your product palletizing needs.
Once you have sourced your new pallets, there is only one thing left to do: get your pallets stacked with products and wrapped with stretch film!
If you are looking for a top-notch stretch film vendor who offers a wide variety of the best stretch film brands on the market, look no further!
If you want a quote on stretch film to wrap your pallets, please reach out to one of our packaging experts.
They will be able to help you purchase the best stretch film for all of your product palletizing, securing, and containing needs!
About Nathan Dube
As the Digital Marketing Specialist at Industrial Packaging, I am honored to create content for such a phenomenal company and work with one of the greatest teams in the Packaging Industry. Whether creating a video, writing blog posts or generating other pieces of content and multimedia, I am always excited to help educate and inspire our prospects and clients to reach their highest potential in regards to their packaging processes and needs.