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‘Perfect storm’: Pallet makers hit by supply shortages as demand takes off

While higher lumber prices have caused Spokane-area pallet companies to raise their prices, they so far have been able to keep up with demand despite a worldwide shortage.  (Tribune News Service)
From staff and wire reports

From staff and wire reports

Along with shipping disruptions and factory backlogs, a worldwide shortage of pallets is threatening to put a further crimp on the flow of consumer goods, from tomatoes to toothpaste to toasters.

Prices have doubled in the past year, and makers, who produce about 1 billion wooden pallets a year, can’t keep up with demand.

“I think it’s a perfect storm,” said Al Raushel, one of four brothers who own Savanna Pallets in McGregor, Minnesota. One of the Midwest’s largest pallet manufacturers, Savanna turns out more than 10,000 pallets a day.

“There’s a trucking shortage,” Raushel said. “We’re struggling to find people to staff our operations, and we’re having some trouble getting material into our facilities.”

While higher lumber prices have caused Spokane-area pallet companies to raise their prices, they so far have been able to keep up with demand, said Christian Morse, operations coordinator for CW Crates and Pallets in Spokane Valley.

“We have seen a larger demand and number of calls and emails of people seeking used pallets because they don’t want to pay lumber prices right now,” Morse said.

CW Crates and Pallets builds custom wooden crates for engineering and aerospace companies and standard wooden pallets for shipping.

“A lot of the mills are hit-and-miss about what we can get,” Morse said. “Wood prices have tripled and quadrupled depending on what you are looking for. It’s been difficult to pass the price increases on to customers, as well.”

The problem on the national front, Raushel and others said, is linked to a surge in the economy as the COVID-19 pandemic dies down. Companies of all kinds slowed their operations last year as the pandemic forced restrictions on activity.

Now, as business begins to pick up, sawmills aren’t staffed. Truckers are on the sidelines. Korean nail factories are running months behind in filling orders.

And pallet makers often are bidding for scarce wood against homebuilders. Result: The price of wood, in some cases, has tripled. Bottom line, a new pallet that sold a year ago for $12 to $14 now costs $25 to $28.

“There just isn’t enough (wood) to go around,” said Tim Logan, owner of Viking Pallet in Maple Grove, Minnesota. “It’s just a constant headache.”

Logan spends much of his time these days trying to find wood, trucks, nails and workers.

“You’re just running from crisis to crisis,” he said. At least Logan doesn’t have to worry about finding customers. Viking Pallet is turning away new accounts in order to be sure it can take care of its existing customers.

Pallets are a relatively new invention, dating from the 1930s. In recent decades, they’ve become the standard for shipping consumer goods. Pallets lend themselves to automation, saving time and money for the companies that use them.

According to the National Wood Pallet and Container Association, pallets are used by 93% of all companies that handle materials.

“I can’t think of much that’s produced in our country right now that’s not shipped on pallets,” said Rob Schultz, vice president of business development at J&B Pallet in Lake City, Minnesota.

“Unfortunately, it’s gonna affect everything.”

Spokesman-Review staff writer Thomas Clouse contributed to this report.