Valued Weber Client,
I addressed you only a week ago on the rapid rise of the cost of pallets on the West Coast – which is being reported nationally as well. (You can read that letter again in the 6/4/21 update below.)
Weber’s pallet vendors last week again – with little notice – raised the cost of pallets about another $2.00 for both GMA #1 and 2 pallets. In fact, the cost of #2 pallets is just over $1 less than #1 pallets (new, or practically new.)
As an additional note, California metropolitan area sales tax ranges from 8-10%, which is not included in these rates.
You should be assured that we are doing everything that we can to buy pallets at the best market price possible – and we do buy in truckload quantities. Unfortunately, demand is currently exceeding supply, and many pallet vendors will not even accept purchase orders from new customers at this time – choosing to supply their existing customer base as best they can.
Once again, every pallet that we provide to our clients has turned into a net loss.
Two weeks, ago, we announced a new temporary pallet rate. But with the purchase cost increasing again, and no relief in sight, Weber (and you) are best served with a variable cost-plus structure. This structure will reduce your pallet prices in the future – when they finally come down again, which I believe they must, as more supply comes online.
Going forward, our rates per pallet will be updated each Monday. Those rates, along with each prior weeks’ rates, will appear on our “Pallet Rate Updates” page on the Weber Logistics website: www.weberlogistics.com/pallet-rates.
Thank you very much for your attention and understanding, and continued trust in Weber.
Robert E. Lilja
Chief Executive Officer
|Week Start Date||Week End Date||#1 GMA||#2 GMA|
|June 14, 2021||June 21, 2021||$15.35||$14.26|
Valued Weber Client
First: Thank you for the continued opportunity to serve you and your customers every day.
As you may be aware, there is a national shortage of lumber, which has been widely reported in the media, and has had a profound impact on many industries that consume wood products.
Perhaps the most well-reported is the shortage of lumber for the home building industry, which has dramatically driven up the cost of new housing, and has in fact led to delays and temporary shutdowns of some commercial and residential construction and development.
The wood futures market has risen nearly 400% in the last 52 months, and that has in turn driven up the price of every product made of wood, including wood pallets.
Weber was informed by our vendors last week that they are immediately imposing a rate increase of $2.00-$3.00 on our purchase cost for standard GMA pallets, which doesn’t include the increased sales tax basis that we will pay on the higher invoice amount.
3PLs like Weber are truly cost-plus businesses. We can’t absorb increases of this magnitude – in fact, today, every pallet that we provide to our clients has just turned into a net loss.
To recoup the loss, Weber must change the rate for pallets supplied to our clients for their outbound shipments.
Effective in your June billing, we will raise the rate charged for client pallets by $2.50 per pallet.
You will see that charge for any pallets used in your outbound shipments. If you don’t normally see pallet invoicing, this will have no impact on your cost.
We all hope that these increased costs to us will ease. If they do, be assured that Weber will reduce the pallet rate to you as much as it is reduced by our most competitive pallet vendors.
Thank you very much for your attention and understanding.
Robert E Lilja
Chief Executive Officer