CHEP AUSTRALIA ANNOUNCEMENT
Dear valued customer,
CALL TO ACTION - PALLET CIRCULATION
As lockdown restrictions across New South Wales and Victoria are lifted and as we enter the all-important Christmas trading period, I am reaching out to request your urgent co-operation and help.
The unprecedented and unpredictable shifts in supply chains arising from the COVID-19 pandemic, have significantly increased the demand for pallets globally, including here in Australia.
Short term, Australia is experiencing a short fall in available pallets to meet this demand. This is due to higher inventory levels being held on pallets in warehouses to buffer against multiple COVID-19 impacts, including international shipping disruption. We estimate that the equivalent of one month’s additional stock is being held on pallets, as compared to the same time last year. Fewer pallets are therefore available to circulate day-to-day between the producers, manufacturers, retailers and others who participate in the shared industry pallet pools.
Together, we successfully navigated the 2019 / 2020 bushfires and 2020 COVID-19 Christmas trading challenges. We kept pallets circulating, creating efficient flows between you and your partners, so that essential goods could be delivered to consumers. There is no reason why this should not be the case in 2021.
Increased safety stocks, pallet hoarding and the disruption of normal flows back to our Service Centres, is exacerbating pallet supply issues
Our pallet pool today is larger than it was pre-pandemic, with a 41% increase in new pallet purchases this year, versus our prior 5-year average.
Despite this, the increased levels of inventory held on pallets, coupled with a growing trend to both hoard pallets and circumvent the usual flows in the shared pooling model, is now resulting in substantially fewer pallet returns to our Service Centres versus this time last year.
- causing unnecessary adverse impacts to supply, as pallets are not able to be relocated to where they are needed, and are unable to flow smoothly through all legs of the supply chain; and
- is restricting our ability to undertake regular professional inspection and repair of pallets at our Service Centres, to ensure they meet our quality and safety standards and the needs of your supply chain.
Working together to resolve the issue
We request your urgent attention and co-operation in addressing this issue, to enable a fair, and equitable allocation of pallets to all participants in the pool, and to ensure pallets circulate efficiently through the supply chain.
We urge you to:
- return empty pallets in a timely manner, direct to poolers, as you have done in prior years.
- review your pre-Christmas production plans and consider whether any of these can be rephased into the New Year, reducing your pallet requirements between now and Christmas.
- encourage all your suppliers, customers, or other parties you interact with, to also return pallets direct to poolers, in a timely manner.
We in turn, are committed to delivering a speedy, fair, and equitable allocation of pallets back to customers to mitigate these short-term industry challenges.
With the decline in return volumes, we are unable to guarantee full supply to customers, at this time. Our operational teams are triaging the situation on a daily (and sometimes hourly) basis. They are doing an incredible job in this “once in a 100-year event”.
We appreciate and thank you for your support
We are continuing to work collaboratively with all parties in the supply chain, as well as relevant industry bodies, to address this short-term issue. Given the shared nature of our pooling model, we all have a role to play.
We thank you for your support, understanding and patience as we work together to address these industry challenges and are confident that together, we can facilitate the timely flow of pallets ensuring that we all have a successful Christmas trading period.