Profits from Pallets

Economy and sustainability come together in optimum systems.

Pallets can have major hidden impacts on produce waste, shipping costs, and the sustainable use of materials. Although usually used only for the relatively short time produce is in transit from the field to the store shelf, the impact of that time is multiplied because it can be measured in the hundreds of billions of miles.

“Trucks travel 275 billion miles on American roads, with 80 percent of them used to ship commodities and consumer goods,” says Jason Adlam, vice president for sales at CHEP USA, Alpharetta, GA. “Transportation is a critical component of the consumer goods supply chain – and that is why virtually every retailer is asking its suppliers to become more efficient, reduce costs and become more sustainable to win with consumers and spark marketplace growth.”

Sydney, Australia-based Brambles owns CHEP, a major pallet supplier worldwide, and its sister company IFCO, a major supplier of reusable plastic containers.

Smaller May Be Better

One of the newest developments in resource efficiency is the availability of smaller pallets for smaller loads. “CHEP recently launched the half pallet in the U.S. market,” says Adlam. “The benefits of the 40-inch by 24-inch pallet include its ability to assist retailers in reducing the cost to ship, handle and display products from the point of manufacturing to the point of sale. The idea is that half-size pallet loads can go from the farm and processing facility to the retail store with minimal manual handling. This drives efficiency, reduces product damage and eliminates other wasteful practices.”

Photo Courtesy of PECO

Not to be outdone, a U.S. pallet provider has come out with a product just 50 percent as large as the half pallet, and it can double as a floor display at retail.

“Our contribution to ‘what’s new and improved’ is our new 20-inch by 24-inch quarter size of our standard 48-inch by 40-inch pallet/base for use under point of sale floor displays and for use as a shipping pallet for small lots and small footprint sized products,” says Gary Sharon, vice president at Litco, Vienna, OH.

Litco specializes in lower cost press wood pallets, made by molding wood and resin under high heat and pressure. “It can be used for a base under point of purchase floor displays, and also as a pallet for small lot shipments. It is inexpensive, aesthetically pleasing, space saving, nestable, lightweight, yet strong. It has safer, rounded corners, no nails, no ‘foot trip points,’ which avoids feet getting stuck between the top and bottom of the pallet/base. There are no nails, mold, bark or contaminates such as listeria.”

Shippers and retailers alike can use a software program to see, in advance, how large a pallet they need, as well as the optimal amount of material and design.

“The engineering in the Pallet Design System enables users to quickly and accurately determine pallet performance under the intended conditions of use without time-consuming and expensive testing or trial and error,” says Patrick Atagi, vice president for advocacy and external affairs at the National Wooden Pallet & Container Association (NWPCA), Atlanta. “Comparisons in performance are easily made between different pallet designs, wood species or grades, fasteners, and component dimensions.” Brand name shippers are already using this software to design pallets with enough material to be strong enough for the job, but not so much as to be wasteful.

“Many major retailers either use or require the use of the Pallet Design System for their new pallets,” says Atagi. “This ensures using the optimal amount of material for the job needed, and avoiding ‘over building’ a wooden pallet. Del Monte, to my understanding, uses the Pallet Design System.”

Get To The Store Intact

Nothing improves resource efficiency in moving produce more than minimizing damage to the product, and to the workers loading, transporting and unloading it. “The Pallet Design System structural

analysis and safe load estimates reduce concerns over human health and safety, and reduce or eliminate product damage which can result from inadequate pallet strength, stiffness, or durability” says Atagi. “The bottomline is the retailer should use the correct and safest pallet for the job, whether new or recycled. I underscore safety, because often times there are hundreds of pounds if not thousands on a pallet. Worker safety should be paramount.”

One major California fruit grower considers pallets so important in reducing damaged or unsafe food incidents that they make their own under highly controlled conditions.

“The retailer should focus on arrivals and getting their produce in the same condition as when it was shipped,” says Denver Schutz, technical services manager at Gerawan Farming, Fresno, CA. “When suppliers ship on reused pallets, there is a chance for product damage. This would include crushed boxes, pallets that may have fallen over in transit and damaged product. Ultimately, a retailer should identify what is most important and strive to achieve those goals.”

Gerawan Farming, a major peach and nectarine grower in California’s Central Valley, ships on its patented Prima Pallet. “At Gerawan Farming we pride ourselves in making our own pallet,” says Schutz. “Our Prima Pallet is fabricated inhouse with select wood from trusted mills, each style custom-designed to safely protect the specific package it will carry.” Damage to the produce is a major issue to consider when considering what pallets to use.

“Product damage can be a large opportunity for a retailer to reduce costs resulting from damaged products and produce on less than stable platform and unit loads,” says Adlam. “It is critical to look at the entire unit load, including the pallet to optimize the system to be the most robust, and environmentally stable solution. Often, a pooled pallet provides the best solution to reducing product damage throughout the supply chain.”

Rent Or Buy?

Among the most important economic decisions concerning pallets is whether to rent or buy. The consensus answer among the insiders most involved with pallets looks to be — it depends.

“Renting or purchasing depends on the retailer,” says Schutz. “The retailer normally drives this decision, but we always share our point of view. If we must use a pooled pallet it will always be a plastic iGPS pallet. We prefer the plastic iGPS pallet because of its overall appearance, durability, and cleanliness.”

Photo Courtesy of Gerawan

“The North American pallet industry has seen continued growth and participation in the pooled pallet market,” says Adrian Potgieter, senior vice president of sales at PECO, Irvington, NY. “Many U.S. consumer packaged goods companies converted from whitewood to rental block pallets.

“Leading retailers, such as Costco and Walmart, also demonstrated a strong preference for block pallets, because they can hold more weight (up to 2,800 pounds) safely stored in overhead racks, allow true four-way entry, and are better for the handling and displaying of products,” says Potgieter.

One option is to buy used pallets for one-way shipping, but while this may be economical, the buyer should beware. “One-way pallets are ideal for use in cases where shipping pallets are easily lost or difficult to recapture,” says Sharon, “also for companies that do not want to rent pallets because of the related costs involved with accounting and replacement of lost rental pallets. Used, recycled wooden pallets are popular for one-way shipping because the pricetag is low. However, the true cost of using them is much higher but is not reflected in the price. Most used pallets have been through the recycling process many times which makes the look and performance inconsistent and creates a high potential for contamination on the pallet surfaces.”

With this rental factor in mind, PECO offers tailored services. “PECO customers pay a simple, all-in-one price per pallet and don’t have to worry about sourcing, storing, tracking, or reselling their pallets,” says Potgieter. “And we consistently deliver high-quality, hassle-free pallets that work smoothly — even in fast-moving automated processing lines.”

The decision of whether to buy or lease, or whether to go with new or used, often comes down to the nature of the product. “Leasing a pooled pallet works well for almost all produce items that are shipping into most U.S. retailers, major wholesale grocers and some foodservice lanes,” says Adlam. “Purchased recycled pallets may work better for products with long storage times, export products and non-traditional retail lanes.”

Reuse Or Recycyle

The environment and the economy come together on the challenging issue of finding a way to reuse or recycle the material in pallets.

“All pallets are made to be recovered, refurbished and reused again,” says Tim Debus, president and chief executive of the Reusable Packaging Association, Tampa, FL.

“Most of what we do is support the reuse of the material. Reusable applications lead to savings in the supply chain. We see a lot of trending toward reuse of the materials.”

There are already businesses that take old wooden pallets and either repair them, or find ways to reuse the materials. “Used wooden pallets are generated at a source that receives palletized goods and offloads them,” says Sharon. “If they cannot use the empty pallet, they contact a pallet recycler for a pickup. The recycler normally pays for the pallets, takes them to his shop and sorts the pallets. They repair the good ones, and grind the unusable lumber for mulch. They sell the repaired pallets to another company that loads goods onto them and ships them down stream to their customer. And the cycle begins again.” Even shippers who never use pallets twice, like Gerawan Farming, find ways to recycle the material.

“We sell all of our used and broken pallets to third party pallet companies,” says Schutz. “They normally fix the pallets and sell them to other companies that may use them. That is just too risky for us. We always stack our fruit on new, and never previously used, Prima Pallets.”

Failure to reuse or recycle pallet materials is largely a matter of logistics, or of inadequate commitment to sustainability. “The fact that wood pallets are landfilled is not an inherent problem with wood, it’s a failure of infrastructure, which is why we’re proud of the recycling network that exists and is growing throughout North America,” says NWPCA’s Atagi. “Using a Carbon Calculator pallet users can calculate the carbon benefits of your efforts to recycle/repair pallets and keep them from landfills.”

Just as growers increasingly must answer to sustainability standards, everyone in the produce supply chain will also face challenges in using sustainable pallet practices. “We will be launching Nature’s Packaging,” says Atagi. “A website and initiative that develops and centralizes information and marketing materials for the wooden pallet and packaging. I presented materials at the United Fresh Produce Association Supply Chain Logistics meeting at the Washington conference last year on the initiative, and there was a great deal of interest and excitement about it from United’s members on the committee including Tanimura and Antle. For the produce industry, it’s important that not only is your product sustainable, but even the pallet you ship it on is sustainable.”