Pallet Shortage Adds New Wrinkle to Pandemic Supply-Chain Issues

A national pallet shortage is affecting already-strained supply chains in a number of US markets, including the $5.6 billion fresh produce packaging industry, where pallets are used in distributing both bulk and pre-packaged produce:

• High demand, limited availability, and record lumber costs have pushed pallet prices up 400% since April, according to the Produce Marketing Association.
• A shortage of trucking capacity to reposition existing pallets is exacerbating supply issues wrought by the COVID-19 pandemic.

As a result, retail prices for produce could go up due to the added costs of distribution. Additionally, shipments could face delays until the compounding lumber and pallet shortages are resolved. While the shortage is not expected to affect consumers to much, growers and shippers are figuring out ways to adapt, such as by implementing temporary changes to their pallet requirements (without compromising on safety).

Fresh Produce Packaging Demand to Near $7 Billion in 2024

Demand for fresh produce packaging is forecast to increase 3.7% per year through 2024, driven by:

• rising demand for produce sold in some form of packaging, including pouches, bags, and rigid plastic containers
• more intensive use of higher value packaging that offers convenience and ease-of-use features, superior performance and shelf life, and/or improved environmental footprints
• increasing sales of ready-to-eat (RTE) salads as well as of pre-cut produce such as apple slices, melon spears, and carrot sticks – typically sold in tubs, cups, or other rigid plastic containers

Nonetheless, stronger increases will be limited by relatively slow growth in overall domestic produce output, with declines projected for a number of key fruit and vegetable types, including tomatoes and citrus.

Want to Learn More?

Fresh Produce Packaging is now available from the Freedonia Group.