Commentary: “For want of a nail the shoe was lost. For want of a shoe the horse was lost. For want of a horse the rider was lost. For want of a rider the battle was lost. For want of a battle the kingdom was lost. And all for the want of a horseshoe nail.” I remember being fascinated by this proverb when I was in elementary school. It taught me that overlooking the smallest details can wreak havoc on a project. This ancient proverb lends itself well to the situation the United Kingdom (U.K.) is facing with Brexit, its exit from the European Union (E.U.). The focal points of Brexit have involved macro issues such as how to pull the U.K. out of the E.U., how tariffs on future trade will be handled, whether the U.K. will form its own free trade agreement with the U.S., and how E.U. standards on products entering E.U. countries will be applied to soon-to-be, ex-E.U. member, the U.K.
All of these issues are still hot topics of discussion, but apparently one issue that nobody seems to have considered that is threating to have an immediate impact on the U.K.’s trade with the E.U. is pallets. The U.K. officially left the E.U. on January 30, 2020, but with the agreement that it will have an 11-month transition period that will last through the end of 2020. This cushion allows the U.K. to remain in the E.U.’s customs region and to continue to adhere to E.U. rules. However, come January 1, 2021, whether it has a trade deal with the E.U. or not, the U.K. will fully exit this organization.
Starting on January 1, 2021, pallets moving goods between the U.K. and E.U.-member countries will have to comply with the International Standard for Phytosanitary Measures – publication 15. The ISPM-15 mandates that for purposes of controlling the spread of diseases and plant pests, most wood pallets must be baked for 30 minutes at 132.8 degrees Fahrenheit. The E.U. exempts member nations from this requirement, but after January 1, the U.K. will no longer be an E.U. member. The U.K.’s Timber Packaging and Pallet Confederation already has stated that it is short of ISPM-15 compliant pallets, and because of the pandemic does not think that it will have sufficient numbers of pallets to accommodate the trade between the U.K. and the E.U. when the U.K. is on its own.
Imagine how something as mundane as a pallet can stop trade in its tracks. Over the years, I have come to appreciate the importance of the inconspicuous pallet. My office is surrounded by manufacturing and distribution operations here on the U.S.-Mexico border. Some of my neighbors are spending more than $50,000 a month (yes, a month) on pallets to ship their products. Pallets are so precious that there are companies that come daily to the industrial parks surrounding my office to pick up pallets that can be reconditioned, and to recycle the wood or plastic in other pallets that can’t be reconditioned. While used pallets are leaving the parks, flatbed trucks deliver new or reconditioned pallets on which cargo will be shipped.
So many products that we consume come to us stacked on pallets that are loaded into truck trailers or rail car containers. One of the most in-demand jobs in any industrial park is a forklift operator who can deftly load, unload, and stack pallets on high racking. Without forklift operators, supply chains and trade itself will come to a grinding halt.
Pallets are a pain to transport because they are not solid, and a lot of space is wasted when you stack them on a trailer. In logistics, the goal is to maximize a load of cargo in any mode of transportation being used, given weight limits and space. While pallets generally don’t weigh very much, they are bulky and only a limited amount can be transported at a time. Thus, they are generally not shipped to destinations far from where they are manufactured.
So, ironically for the U.K., for which virtually all major and even minor aspects of Brexit have been discussed ad nauseum, the humble, but extremely powerful pallet, seems to have been overlooked. Reports have estimated that at least 100 million pallets move cargo between the U.K. and E.U. annually. What happens if less than this amount of pallets is available for U.K.-E.U. trade at the start of 2021 remains to be seen. It would certainly be an inauspicious start for the two entities if a lack of pallets affects supply chains, the distribution system, and overall trade – not a good prospect in the age of the pandemic.
In the meantime, British policymakers should memorize the following: For want of a nail the shoe was lost. For want of a shoe the horse was lost. For want of a horse……..