The cost of wooden pallets is soaring amid widespread supply chain bottlenecks.
Dominick Davi — the president of Greenway Products & Services, the largest pallet company in metropolitan New Jersey, New York, and Pennsylvania — told Fox Business that he has “never seen anything like” the current price increases. Before COVID-19 and the lockdown-induced recession, the wooden pallets cost approximately $12 apiece; today, the price sits near $21.
“90% of everything in the United States is shipped on a pallet … it’s a very integral part of the whole entire supply chain,” Davi told Fox Business. One Greenway Products & Services customer, for instance, purchases 520 pallets per day, six times per week. Before the recession, the customer paid $37,000 each week; today, he pays $65,000.
Indeed, the usually high price of wooden pallets may have motivated two men from Tampa Bay, Florida, to steal them from local businesses.
WFLA News reported:
The Polk County Sheriff’s Office said it began investigating Bobby Herrera, the owner of JCI Pallet, in July after he was allegedly caught on video removing seven semi-trailers full of wooden pallets from the Saddle Creek Logistical Services in Auburndale and the Walmart Distribution Center in Winter Haven. The sheriff’s office said he could be seen driving his company’s semi-truck onto the premises and removing the trailers…
Investigators later learned his on-site manager, Nicholas Nigel Howard, 36, of Opa Locka, had helped him remove trailers from two distribution centers. According to detectives, the men planned and coordinated the theft of 25 semi-trailers that contained nearly 5,000 wooden pallets. The stolen trailers and pallets combined were worth approximately $935,663.
Detectives say the pallets were taken to JCI, where they were emptied, then returned or abandoned. Two of the trailers were already empty. All of them were eventually recovered.
Beyond pallets, many American businesses are dealing with shipping expenses that have increased by several hundred percentage points.
“Bringing a 40-foot container from Asia to the U.S. twelve months ago was about $1,500. Today, you’re spending upwards of $30,000 and we’re certainly averaging close to $10,000,” Traeger CEO Jeremy Andrus told CNBC, implying that shipping costs have increased by over 550%. “Our inventory is big and heavy. It takes up a lot of container space, and so we are particularly sensitive to transportation costs.”
“We’re sensitive to a near-term shift. The world will right-size itself, in terms of these costs, and we will see some significant flow through to the bottom line,” he continued. “But right now, we are driving the brand. We are thinking about the engine, the brand health.”
Meanwhile, Goya Foods CEO Bob Unanue told Fox Business that his shipping costs have risen by over 1,000%: “We bring products like coconut water from Thailand [and] from Vietnam and a container with about 1,300 cases of coconut water in it used to cost about $1,800, $1.40 a case; it’s gone up to $20,000 to get on a container ship if you can.”
“We’re vertically integrated,” said Unanue, confirming that the cost of packaging materials has skyrocketed.