The Lowly Wooden Pallet is a Critical Conveyance in the Supply Chain

In a recent interview, discussions with Patrick Atagi, VP for Advocacy & External Affairs at the National Wooden Pallet and Contain Association (NWPCA)  helped to educate me on just how prolific wooden pallets are in the global supply chain.  Patrick has a long history of working in agriculture related associations, including US Apple, US Fresh Produce Specialty, Dupont, and the Department of Agriculture.    He has also worked for a while back on his 500 acre family farm in Eastern Oregon, near the Snake River, and has also worked for the Peace Corp.  All of this has prepared him to be an advocate for the wood pallet association.

The wood pallet industry is often maligned, as many people don’t pay much attention to pallets. In reality, wooden pallet industry is an $11.5 billion American success story, with close to two billion wood pallets in use every day in domestic shipping and warehousing operations; and about $400 billion worth of American trade is exported annually using wood pallets and containers.  In addition, wood pallets are viewed by the BioPreferred team at USDA as a core part of the biobased economy. Wooden pallets are by definition an important sustainable and reusable component of the logistics industry.  Today there are over 2 billion pallets in circulation, 1.5 of which are remanufactured, and 500 million which are new every year.

An explanation is in order here.  Pallets may be damaged by a forklift operator or may wear out during normal use over a period of time.  Remanufacturing pallets involves removing broken boards and replacing them, and reselling the pallet as a reused, remanufactured pallet.   The largest size pallet is 48’ by 40”, which is the Grocery Manufacturers Association Standard.  About 40% of the market are GMA standard pallets.

The industry functions in the following manner. First, they mass produce the 4840 pallet, providing a strong pallet at a reasonable price, and this is through highly efficient manufacturing processes.  The second way is through remanufacturing of existing pallets, such as having companies like CHEP sent pallets out to repair.  And the third vehicle is through customized pallets, that are produced in special sizes.  For instance, special sized pallets need to be designed and constructed for windmill blades, heavy equipment, barrels, and many other products that are part of the global logistics economy.  If you stop to think about it, almost 94% of products in the US economy travel on a pallet of some sort when being moved from one place to another!  There are over 3000 pallet re-manufacturers in the US, who will recycle the pallet and send them back into use. About 10-15% of the members are global in nature.

Of the primary materials used in constructing pallets, the largest by far is the simple solid wooden pallet (93%), followed by plastic, metal, and corrugated cardboard. The type of wood used in pallets varied by whatever is most available regionally, and the two major types are Southern yellow pine (softwood pallets) and oak (hardwood pallets).  Oak is used because of its strength and wide availability. There is often a surplus of oak leftover from markets such as housing or furniture construction, which is then used in pallet production. Because it is considered a high-density hardwood, oak is ideal for pallets that must haul heavier loads of fragile goods.[1]

Pine is commonly used in pallets because softwoods tend to be more consistent in weight than hardwoods, giving the product a high strength to weight ratio. Softwoods are also easier to dry, which helps prevent contamination from fungi, molds, or other pests. For this reason, pallets produced with a mixture containing southern yellow pine are ideal for industries such as pharmaceutical or food and beverage where pallet cleanliness is paramount.

All pallets are made from the core of the tree (“the cant”), called the low-grade lumber. The outer part of the tree is typically a clearer product without knots and imperfections. That lumber goes to other uses such as furniture or flooring.   Other uses of “low-grade lumber” including railroad ties, and road foundations for the oil industry in muddy conditions, when there is no road present.  The cant of the tree is cut into boards that are fastened typically using a high-powered fastening tool.

There is a small segment of the market known as recycled pallets, which include cardboard and plastic pallets.  But there are significant problems associated with cardboard and corrugated pallets, such as when they get wet or in high humidity they will lose 50% of their rigidity in 24 hours.  Nothing yet has been found to replace the strength, sustainability, maximum safety, and low cost using the least amount of resources then the standard wood pallet.

In fact, there is a significant amount of engineering that goes into the lowly wood pallet.  The Pallet Design System™ (PDS)[2] is a product specification tool, an engineering design tool, a professional marketing tool, and an educational tool – all contained in an easy to use software package developed for the wood pallet industry. The USDA BioPreferred Program recognizes the Pallet Design System™ (PDS) innovative approach, and recognize it as the only product that evaluates wood pallet strength, stiffness and durability. PDS’ innovative approach is the result of 30 years of rigorous engineering and creates a better performing pallet that is good for the environment, lasts longer, is lighter weight and uses less materials.

Since its introduction in 1984, PDS has developed a highly respected reputation throughout the material handling industry. When NWPCA released PDS Version 5.1, it marked the 33rd version of PDS over its 29 year history. The major new feature in Version 5.1 is its integration with LoadSync™ – software recently developed by NWPCA that will enhance the communication of pallet and unit load design information between wood pallet manufacturers and their customers. Each new version of PDS incorporates the latest data, engineering, and technologies which result from NWPCA’s continuous program of research and development. Millions of dollars have been expended on PDS, not only for software development, but on research toward increased understanding of the relationships between the design and performance of wood pallets and the entire unit load.  PDS enables wood pallet manufacturers to assist their customers in:

• significantly reducing costs
• significantly reducing product damage
• significantly increasing safety throughout the unit load handling system

Another segment of the pallet industry are plastic pallets, which are very expensive ($80 each compared to $10-15 for a wood pallet).  Given that pallets are often lost, and that plastic pallets can be damaged (such as cuts from forklifts or through conveyance of pathogens), they are expensive to replace.  Plastic pallets in a cold area like a loading dock can also build up a layer of ice, making them slippery to work with.  There are a number of advantages and disadvantages of different pallet types discussed on this blog.

The most recognizable pallet brand from around the world is that of CHEP, which owns millions of distinctively blue painted pallets with white CHEP marking. There are other notable pallet pools that also have distinctive markings and colors.   In North America, another popular pool pallet marking is the red pallet with white lettering sported by the PECO Pallet.

It should be noted that both companies take strict enforcement policies with respect to protecting their pallet assets, and such pallets should not be used in unauthorized situations or dismantled for craft projects. There is a vast array of different proprietary pallet markings that a pallet collector or recycler may encounter, in addition to the large proprietary pools such as CHEP and PECO. It is important to recognize the markings of such may be subject to assertions of ownership, so as to avoid potential legal complications.  For instance, both CHEP and PECO own the pallets, and lease them to major retailers such as Walmart.  Other pallets are single use, and manufacturers do not expect the pallet to come back, so the least expensive conveyance is important.

There are some groups that are opposed to wood pallets, because of the concern that forest pests (such as the Asian Longhorned Beetle and the Emerald Ash Borer) will travel on pallets across borders and cause diseases in the ecosystem.  There have been an increasing number of studies using data from federal agencies such as the USDA and Custom Border Protection to track interdictions, and which plant pests came through.  Pests coming up through Mexico often die due to the colder weather in the US.  However, the most important development here is ISPM-15.  The International Plant Protection Convention (IPPC) developed standards to be used in international trade known as International Standards for Phytosanitary Measures (ISPMs). The application of these standards is designed to protect forests and ecosystems by reducing the likelihood of non-native pest infestations, preventing both loss of species diversity as well as economic losses associated with the costs of pest eradication and control. Some of these controls include heat treating solid wood material over a set amount of time in a dry kiln to kill wood boring pests.  Since implementation of the ISPM-15 requirement in 2005-2006, the risk of plant pests arriving via wood packaging have significantly decreased. In a study conducted by the Nature Conservancy with funding from a grant, infestation rates of live pests in consignments using wooden packing materials decreased by up to 52 percent from 2003 to 2009, following implementation of ISPM-15.

A recent study also shows that the recyclability of wood pallets is undisputed.  Preliminary results of a research project conducted by Virginia Tech on the disposal of wood pallets at landfill sites reveal that 95% of wooden pallets are being recycled. The landfill avoidance study was independently conducted at Virginia Tech over the course of two years. Both municipal and solid waste (MSW) and construction and demolition (C&D) landfill facilities were surveyed to better understand how pallets were being handled at these facilities. According to the study, the number of pallets entering the landfill reduced by 86%, for both MSW and C&D facilities. Environmental awareness, limited space and a desire to be more waste efficient have driven many of these facilities to sort and recover certain types of waste. The overall presence of wood pallets at landfill facilities has also significantly decreased.[3]

[1] http://www.rosepallet.com/lumber-used-for-pallets/

[2] https://www.palletcentral.com/page/PalletDesignSystem?

[3] https://www.palletcentral.com/news/393334/Study-Shows-95-of-Wooden-Pallets-are-Recycled.htm