Brambles cool in a crisis

BRAMBLES chief executive Graham Chipchase warns European manufacturers and retailers may increase levels of “safety inventory” in response to geopolitical tensions, worsening the pallets shortage.

“The global impact will be related to any increase in the price of oil, with a knock-on effect on the price of fuel,” he said, highlighting that Brambles mitigated these impacts through its surcharge pricing mechanism.

At its investor meeting on Friday, Brambles detailed some of its actions to protect its stock in the midst of “an extraordinary inflationary environment”, which Mr Chipchase said was here to stay for at least another year.

Brambles had deployed smart assets, or digitised pallets, into its network in a targeted way to “confirm suspected issues like misuse” in 12 markets, which confirmed its suspicions in relation to “hostile recyclers in the US”.

“We thought our assets were being sold illegally (so) we deployed 400 smart assets and were able to prove our hypothesis with 75 per cent of these smart assets being sold illegally,” Mr Chipchase said.

“We were therefore able to take action with legal intervention and asset recovery.”

The actions resulted in the equivalent of a $2m savings in capex in the first half, he said.

Brambles would scale the targeted rollout to 20 markets by June 30, subject to device availability.

In Australia, Brambles was buying double the volume of new pallets this year. Brambles had a pool of 345 million pallets, crates and containers used across 60 countries at the end of June last year, the backbone of global supply chains.

Brambles said lumber inflation was at “unprecedented levels”, which had affected repair costs, the capital cost of pallets and the availability of lumber to produce new pallets.

Shares in Brambles closed down 8c at $9.81.