The cost of pallet theft in the supply chain

The cost of pallet theft in the supply chain

January 05, 2022

A story by Susana Márquez Pedrouso

The first time I realised pallets were subject to theft was thanks to my former manager at a leading sports brand.

We were talking over the phone. He said, “Yesterday I had a very late night. I was outside a store watching the backdoor for a few hours. I knew it, I knew this guy was stealing something from us, but I didn’t know what it was”“Did you catch him?” I asked. He said, “Yes, he was stealing pallets from the stockroom.” “What?” “Yes, pallets are in high demand and can be sold.”

I was picturing the guy in my imagination, going through the backdoor, back and forth to steal five or six pallets. What amazed me was that there was a stockroom full of top of the range trainers and clothing, probably some of the most desirable products on earth. But he chose the pallets.

Pallets are part of the landscape in any warehouse or stockroom if space allows. They come in and go out, some of them stay. And usually, they’re not part of the stock control or audits when the core business is not pallet management.

Low profile theft. That was 15 years ago, but I never forgot the learning from that experience. 

Maybe it was an early sign of many other learnings to come! I’ve spent most of my professional life in Retail Loss Prevention/Security, analysing the supply chain components like a scientist in the laboratory.

Finding the gaps and minimising losses

Pallets

 

Pallets were there along the way. Natural wood color pallets (now I know they’re called white wood pallets). Blue pallets, green pallets, red pallets. Plastic ones too. Some of them even had wheels and were taken to the sales floor for immediate replenishment. 

Cool, but my job was looking after the product placed on them. Who exactly looks after the pallets themselves? Those bits of wood and plastic actually form a huge part of the industrial world that makes it possible for the everyday consumer to get their products. 

In Europe alone, millions of wooden pallets are in circulation. Pallets reduce loading time, improve worker safety, make logistics more efficient, and protect the integrity of the products. Quite simply, pallets form the invisible backbone of the supply chain.

CHEP, one of the largest pallet pooling companies, estimates that millions of pallets and packaging containers are lost across Europe due to theft each year. This includes pallets that are being stolen along with the product loaded on them, pallets being stolen alone, and pallets that are being used without having the right to use them. The latter applies mainly to pooled or rented pallets, like the ones offered by CHEP.

CHEP follows a circular business model where pallets are constantly shared and reused by manufacturers and retailers across the supply chain. The pallets and containers are owned by the pooling company, who takes care of distributing, collecting, repairing and putting them back in circulation. Customers only pay for the platforms they use during the time they use them. Some of the ‘misusers’ are not only using the stolen pallets, but they even try to rent them out!

Keeping the supply chain moving

Pallets

In an ever-changing environment like today’s, where pallet availability is key to keeping the supply chain moving, non-returned or destroyed pallets can have a very negative impact on the whole supply chain and ultimately on the end consumer. Because let’s not be naive, we as consumers end up paying for all losses in the supply chain.

The non-return, trading, or destruction of pallets in order to use the raw material for a new purpose may appear to be of little importance – or even a good thing – but as CHEP’s blue pallets are part of a circular business model, any of our pallets that are stolen or destroyed undermine the positive impact this has on the whole industry.

Europe has seen an unprecedented demand for pallets driven by the COVID-19 pandemic. Not surprising then that this has also led to a surge in pallet thefts!

Some pallet theft is perpetrated by an individual thief picking up pallets behind a store but there has been an increasing number of cases of organised crime rings stealing wooden pallets, plastic pallets and containers. For example, it is not uncommon for such crime groups target plastic pallets, milk crates and bread trays, which they grind down into plastic pellets that are then sold to plastic manufacturers, typically overseas.

Now that I have shared with you a glimpse of my experience in the pallet industry, I would love to hear your thoughts on this. How does your organisation handle cargo and pallet theft? Can we all cooperate for a better outcome? Let’s start the conversation!

By the way, if you see any blue pallets looking a bit lost on their journey, please ping me!

Susana Márquez Pedrouso

Susana Márquez Pedrouso
Manager, Asset Protection EU. Asset Management

Susana Márquez Pedrouso developed her career in the Security and Loss Prevention Industry for more than 20 years, having managed safety and security departments in Nike, AS Watson, Claire’s and CeX.

She pioneered creative projects such as “Information Circle 2.0”, which focused on stolen product traceability in cooperation with Law Enforcement Agencies within several European countries. From December 2019, her role became European Asset Protection Manager in CHEP, where she looks after the safety and security of our Field teams as well as minimising losses of our Blue Pallets.

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The cost of pallet theft in the supply chain | CHEP