SYDNEY, Oct 28 (Reuters) – Australia’s two largest supermarket operators have formed a “task force” to solve a shortage of delivery pallets, the No. 2 grocery chain said on Thursday, the strongest sign of the sector’s exposure to supply chain problems gripping the world.
Coles Group Ltd CEO Steven Cain said the company and larger rival Woolworths Group Ltd had joined industry body the Australian Food and Grocery Council (AFGC) to address a shortage of the wooden crates, linked to a lack of raw material and extended lockdowns.
“Across the nation there is a bit of a pallet-gate going on,” Cain said on an earnings call.
“The lack of wood means not many new ones are being produced.”
Amid restrictions on movement to stop the spread of COVID-19, people around the world are looking for bigger homes or embarking on renovation projects, sapping timber supplies and driving up prices.
Meanwhile, the cities of Sydney and Melbourne, home to 40% of Australia’s 25 million people, have been in months-long lockdowns, causing freight stoppages.
An AFGC spokesperson had no additional comment. A Woolworths spokesperson was not immediately available for comment.
At an earnings call on Wednesday, Woolworths CEO Brad Banducci said the company expected its pallet stocks to last until the end of the year as “what we require for Christmas has been shipped”.
The supply issues add to headwinds for Australian grocers, among the main beneficiaries of the pandemic-led shift to working and entertaining at home, as the easing of movement restrictions undercuts nearly two years of heightened demand.