Using smart technology to alleviate pallet shortages and price increases 

Smart pallet monitoring technologies allow for digital transformation around the availability and utilisation of pallet stocks. Many manufacturers can benefit from this as it mitigates losses by providing real-time data insights on shipments and pallets themselves. Matthew Margetts reports

In the years following the COVID-19 pandemic, supply chain disruptions have become commonplace for businesses in key markets around the world. An acute pain point for supply chains has been the pallet shortages experienced since 2020. In 2022, supply interruptions and high rates of demand resulted in price increases. One report cited a 60-70% pallet price increase for end users.  

The situation seems to be stabilising in 2023, with improved availability. However, the pallet market is experiencing enduring challenges largely caused by inflation and economic conditions. These challenges prevent recovery to pre-pandemic levels – and aftershocks of shortages and elevated prices remain. 

Smart pallet tracking and IoT pallet monitoring systems have advanced significantly in the past 20 years. While the recent pallet supply challenges have highlighted the importance of digital tools in maintaining efficiencies, using technology to mitigate loss, theft, and damage holds everyday benefits for stakeholders.  

With benefits around cost, continuity, and sustainability, smart pallet tracking and monitoring technologies – like those from Smarter Technologies Group – are a simple, powerful way to confront these challenges head on.  

What are the causes of the pallet shortage? 

The Russian invasion of Ukraine has exacerbated the COVID pressures on the pallet industry. The manufacturing cost of a new, reusable pallet rose from €7 to €29 over a few months last year. This high price is attributed to the availability of raw materials, among other factors. Other considerations are long retention times, breakage, loss, recent timber and resin shortages, labour shortages, and the fact that Ukraine was a major producer of pallets prior to the invasion.  

Shortages of second-hand pallets have also been reported – and the demand for reusable pallets has reached never before seen levels. In response to Ukraine-induced shortages, some traders stockpiled surplus pallets – acquired at sometimes very high prices. Another trend that has been observed was pallet rationing by rental companies, leaving customers with insufficient pallets to meet their supply chain requirements. This triggered a further increase in demand for new pallets. 

The benefits of smart pallet tracking and monitoring 

Reduced Theft, Damage, and Losses. Even at the best of times, pallet losses are to be expected. It has been reported that CHEP – a leading pallet pooling company – loses millions of pallets each year. Over and above that, over a billion pallets need to be remanufactured each year as a result of damage.  

Additionally, issues with supply and high rates of demand make pallets an attractive target for criminals. CHEP estimates that millions of pallets are stolen alone, with product on them, or are being used without authorisation in Europe each year. As the industry has come to rely on pallet circularity, these losses pose real worries around supply chain continuity.  

Smart pallet monitoring mitigates losses by providing real-time data insights on shipments and pallets themselves. These data insights are reported to a remotely accessible dashboard, with pre-programmable alerts, geofencing, and tracking capabilities.  

This means, even in high-risk shipping zones and with high-value shipments, the integrity of shipments can be remotely monitored across the supply chain to ensure delivery – and optimal circulation of pallets. In the event of theft, smart monitoring technology improves the chances of recovery. 

Some of the reportable data metrics include the following: 

Weight 

Shock 

Tilt 

Tampering 

Temperature 

Pressure 

Moisture 

Air pressure 

Optimised pallet utilisation 

Trends like pallet stockpiling highlight under-utilisation of pallet assets. Smart pallet monitoring technologies allow for digital transformation around availability and utilisation of pallet stocks.  

The data insights provided by smart technologies make for quickly identified and resolved bottlenecks and information to inspire long-term strategies around route inefficiencies. It also assists in collection and handling times and conditions. This has the potential to keep cycles of pallet movement running smoothly – even when working together with third party operators.  

Maintenance scheduling and remanufacture strategy 

Real-time data insights mean the integrity of individual pallets is better assured. The condition of pallets can be assessed at any time and from anywhere. Alerts and notifications around changing conditions inform decision-making around maintenance and replacement that assists with overall supply chain management.  

This ability triggers a range of benefits including improved safety for pallet handlers, reduced risk for products, improved storage and transport conditions, and reduced waste.  

A true circular economy 

Both wooden pallets and plastic reusable pallets, as well as single-use pallets, present concerns around environmental impact. Discussion around which material is more damaging remains the subject of ongoing debate. Across both materials, stakeholders have an environmental interest in reducing pallet losses and preventing remanufacture.  

In reducing losses and optimising maintenance, the lifespan of pallets is prolonged. This means reduced need for raw materials to manufacture new products. For stakeholders like pallet pooling companies, pallet data assists in their circular business model of collecting, repairing, and distributing pallets at optimal levels. This comes with the added benefit of keeping these pallets out of waste systems for as long as possible.  

Matthew Margetts is a Director at Smarter Technologies.