Aussie Supply Chains at Risk as 40% of Hardwood Pallets Cut!

Victoria's snap decision to ban native forest harvesting has created a chronic shortage of hardwood and led to Australia's largest pallet manufacturer to close its doors.

Mon 24 Jun 24


Australia’s largest pallet manufacturing plant will cease operation next month due to a chronic shortage of hardwood timber. This will remove 700,000 hardwood pallets (about 44% of the country’s supply chain for pallets) from circulation and expose the country’s supply chain in the lead-up to the festive season.

As reported by Timberbiz, Pentarch Forestry’s pallet mill in Dandenong South, about 40km from Melbourne’s CBD, will end operation in July 2024 after former Premier Daniel Andrews’s snap decision to accelerate the closure of the Victorian native hardwood industry left the business—operational since 1989—without feedstock at the Dandenong South site.

“This outcome is the result of the Victorian Government’s decision to end timber harvesting,” according to Pentarch Forestry CEO Paul Heubner, who added that when the mill was secured from its original owners in 2021, “we were confident that the Victorian Government had a workable plan for timber supply until 2030 followed by a transition into plantation, but they have failed to deliver on either promise.”

“The sudden decision to shut down the native timber sector has resulted in significant job losses for Pentarch and other hardwood suppliers, and now 700,000 pallets out of the supply chain each year.”

60% of Australia’s hardwood pallet pool is from Victorian Native Forests

Last year, Wood Central reported that the native forest ban, which came into force on January 1 2024, would heavily strain Australia’s pallet pool system – which, until now, relied on 1 million pallets (out of 1.6 million total pallets) from Victorian native forests.

Global demand for pallets is now surging, with Wood Central last year reporting a 40% increase in the global wooden pallet market over the next five years, which, in turn, is creating a highly competitive supply market.

In May 2023, former Premier Daniel Andrews brought forward a ban on all commercial forestry activities in Victoria’s State Forests – a move that crunched the Victorian native hardwood industry. Footage courtesy of @SkyNewsAustralia.

Hardwood pallets, known for their sturdiness and higher load capacity, are not a like-for-like replacement for softer softwood pallets with shorter lifespans – with hardwood Chep used to transport packaging nationwide.

“It is another blow to our sovereign capability to supply domestic wood products and reduce our dependence on imports, which impacts the global timber economy,” Mr Heubner said, who added that the mill is one of several Pentarch Forestry operations that supply much-needed and renewable hardwood timber products to local and overseas markets.

Wood Central understands that the shortfall, which accounts for more than 40% of Australia’s demand for hardwood pallets, will be offset by tropical imports—which come at a time when Australia beefs up its illegal logging legislation.


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