What buyers say about pallets

Highlights of a new MMH/NWPCA survey show the latest in pallet selection and usage.

By -- Modern Materials Handling, 5/1/2000

The results are in, and pallets continue to be a central component for efficient materials handling. Every two years, the National Wood Pallet and Container Association (NWPCA) and Modern Materials Handling survey industry leaders to gauge pallet usage.

The survey covers a wide range of pallet products, including wood, plastic, cardboard and corrugated, metal, and wood composite. The report also considers the marketplace for new products as well as how existing pallets are used within facilities. Additionally, the survey looks at the growth of programs for reusing and recycling pallets.

The report suggests that "the next 5 years will be a critical time for the wood pallet market."

"The results point to an increase in environmental responsibility that is placing pressure on the marketplace," says Kathy Conroy of NWPCA. "The wood pallet industry must address the demand for products that emphasize retrieval and recovery."

As evidence of this trend, the survey shows the purchases of new wood pallets are down slightly, as is the overall number of purchases for pallet products of all types. The good news is that while purchases are currently down, the majority of respondents indicated that they plan to buy a greater number of pallets over the next 5 years.

Buyers additionally are beginning to value long-term investment in pallets, such as cost-per-use and life-cycle considerations. Wood pallet producers in particular need to respond to this trend by creating pallets of higher quality that can survive dozen of trips.

"Quality is a key issue for our industry. It is especially important as automated systems demand tighter tolerances," says NWPCA chairman Lee Sherman of Timber Industries.

Sherman says he strives to convince customers that pallets are not just a necessary evil for their business, but are instead products designed for efficient movement of materials. Buying quality pallets with long-term benefits can be a wise investment for a company.

Regardless of how pallets are viewed by users, they are considered essential for materials handling. This has created a healthy industry overall.

"It is encouraging to see the total number of pallets in use, and more emphasis on extending the lives of pallets," says Conroy.

Here are some highlights of the MMH/NWPCA report.

Pallet use

The survey reveals that 88% of material handling professionals say they currently use or plan to use pallets at their locations. This is down slightly from two years ago when 92% of respondents were in the affirmative. The current figure is close, however, to what it was during the first survey conducted 6 years ago.

Pallets are used in both warehousing and for shipping in 77% of the surveyed facilities. Some 14% of respondents say they use them only in warehousing, and only 8% use pallets solely for shipping.

Nearly half say they buy more than 5,000 pallets each year, while about 18% of firms purchase more than 30,000 pallets annually. Only 13% bought more than 30,000 in 1995.

Wood is good

Wood continues to be the most dominant material for pallets currently in use within facilities. It also is by far the material of choice for new pallet purchases.

"We expect that trend to continue," says Conroy, "though there are certain applications in closed-loop systems where other materials make sense."

Wood holds 91% of the market for new purchases, down slightly from 96% in 1997. Plastic is making some inroads, but still accounts for only 4% of pallets purchased. That is double though from 1997 when plastic accounted for 2% of new pallets bought.

Wood leads the market because it is cheap to produce and ideally suited for those using pallets for one-way transit.

"Lighter-lumber wood pallets can be purchased for about $7 and are not suitable for reuse," notes Sherman. "These are designed to ship to an end point. The customer is not concerned about getting it back."

Users cite several reasons for choosing wood. Wood pallets offer strength and durability, cost little to produce, are readily available in just about every part of the country, and can be easily repaired or recycled to make other pallets or ground into other products, such as mulch and playground wood chips.

Those surveyed also evaluated some of the drawbacks of wood, with leading disadvantages being a lack of cleanliness, boards that break or crack too easily, problems with disposal, and weight.

The use of wood composite pallet purchases doubled in the survey, though still only 4% of the market. That is up from 2% in 1997.

Meanwhile, metal and cardboard/corrugated materials account for less than 1% each of pallets purchased and currently in use.

The price is right

While initial cost is still the determining factor for new pallet purchases, increasingly customers are beginning to understand that cost-per-use may be a more significant factor, especially in this age where returnable items, such as containers, are being used extensively in industry.

Some 67% say the initial cost of a pallet is a top consideration, though this has seen a steady decline in each survey since 1993, when 85% chose initial cost as the most important factor.

Meanwhile, cost-per-use was chosen as an important consideration by 35% of those surveyed, up from 22% in 1993.

"If you put a little more into buying a stronger pallet, you will be able to reuse them and reduce the cost per use," says Conroy.

Customers who receive their purchases on pallets are also increasingly influencing the types of pallets suppliers choose, furthering a trend towards pushing demands higher up the supply chain. Some 58% say customer requirements factor into their pallet selections.

Quality and the ability to trade-in used pallets are additional purchasing considerations rated by buyers.

Recycling and recovery

Pallets continue to be among the most recycled items in America, even more than aluminum cans. Those surveyed indicate that 73% of all pallets are recycled, while only 27% end their lives in landfills.

Still, only 22% of pallet users are involved in pallet retrieval/recovery systems or third party rental/management systems. This is up only 1% since 1997, but up significantly from 4 years ago when only 7% participated in such systems.

More than twice as many respondents than 2 years ago also indicated that they would consider future participation in recovery or rental programs.

"There is a good environmental message there," notes Conroy.

Sherman feels that pallet producers can help steer the industry toward greater retrieval and recovery by building stronger pallets and marketing them to customers for use in looping systems. Businesses should also be encouraged to make use of central recovery points where pallets can be deposited, repaired, and then redistributed.

"My belief is that a pallet should be a product that is used until it can no longer be repaired. Then they should be turned into by-products," he says. "Pallets should never go away, they should just eventually go into a different form."

Greater reuse is on the rise. The survey shows that 44% of pallets are used 2-6 times, while another 17% are used more than 20 times. Increased usage lowers costs and helps solve disposal problems.

"A more expensive pallet is less money in the long run when you factor in cost-per-trip," adds Sherman.

In addition to the highlights presented here, the survey further examines the leading causes of damage to pallets, how products are discarded after use, detailed use of plastic pallets, the job functions of those buying pallet products, automation equipment used with pallets, and a breakdown of industries using pallets.

A complete copy of the report is available for purchase from NWPCA (703-527-7667, or by e-mail at palletcomm@aol.com ).

De-bugging for export

Companies that do a large amount of export must be sensitive to the demands imposed by other countries. Brazil and China, for instance require that export pallets be fumigated before they can be used to ship product.

Day-Glo Color Corp. of Cleveland, Ohio sends a large amount of their florescent pigments, silk screenings, and dyes overseas. These products are used to create florescent safety materials, such as highway cones, barrels, and aerosol paints. Florescent toys are also made with the pigments.

Day-Glo has been shipping to Australia for more than a decade, and is just now opening up a South American market. Many of these countries demanded specific pallets that reduce risk of infestation, particularly from the Wood Beatle, which likes to inhabit softwoods.

"Australia did not want to receive packaging that contained any wood at all. They did not care whether it was fumigated or not," says William Clark, purchasing agent for Day-Glo.

Due to strict regulations such as these, Day-Glo chose an economical presswood pallet for its overseas shipments (Litco International, www.litco.com ). This molded pallet is produced from low-grade timber that is not suitable for other pallet products.

The entire tree is used in this process, including leaves, bark, trunk, and branches. Old pallets and other recycled wood products are also used. Pieces are cut into chips that are then ground to wood fibers, moisture is removed, and the remaining flakes are heated to kill any insects, molds, or fungi that might be present in the wood.

Next, the wood fibers are combined with a resin that is placed in a mold, heated to 420 degrees F, and compressed under 1400 PSI. The resulting product is four-way entry, nine-legged, nestable pallet. While 60% lighter than wood, it's 2,500 lb capacity is able to support more than the average wooden pallet.

Day-Glo says that the composite pallet is also cheaper than wood, which helps the bottom line for one-way deliveries. The nestable design takes up about one-fourth of the space of other stacked pallets, and a lift operator can easily transport 60 nested units in one load. Once the pallets reach their destination, they can be re-used or recycled easily.

"We also do not have to worry about weather, since they can be stored outside," adds Clark. "And we don't worry about nails popping out or boards splitting. None of those things affect this pallet. We just pick it up and go with it. It is very versatile"

Day-Glo's pigment products are ground into a fine powder that is placed in 50 lb bags. These are sealed in cartons, stacked 11 layers high on the pallet, stretch wrapped, and containerized for shipping.

"In the 10 or 12 years that we have been shipping them to Australia, we have never had a problem with the pallet failing," notes Clark. "It is extremely strong and very clean. The presswood pallet is a guarantee to our Brazilian, Australian, and Chinese customers that they will not have any problems with their governments once they receive the pallets."

Where the rubber meets the pallet

Finding the right pallet sometimes takes perseverance. Clients of U.S. Rubber Reclaiming want raw rubber delivered to them on reusable plastic pallets. Unlike other materials, plastic is cleaner and keeps dirt and impurities, such as wood splinters, from contaminating the rubber.

The pallets also need to support 2,500 lb without bending or breaking and withstand the high temperature from the processed rubber. After a number of plastic products proved ineffective under these conditions, the company discovered a long-life pallet (PDQ Plastics, www.pdqplastics.com ) that was a perfect fit for its closed-loop system.

Based in Vicksburg, MS, U.S. Rubber Reclaiming is a leading recycler of butyl rubber. About 95% of its raw material is reclaimed from old inner tubes, while the remainder comes from rubber parts such as motor mounts and shock absorbers.

The company takes the old material, sends it through a de-vulcanizing process that super-heats the rubber and converts it into raw slabs measuring 42 X 10 X 1 in. The slabs are then cross-stacked 48 in. high onto the 42 X 42 in. pallets and banded.

Vice president and controller Don LaGrone says that several different types of plastic pallets were tested, "but the weight of the rubber tore the legs up."

LaGrone also required a pallet that could withstand the heat retained by the newly processed rubber slabs.

"The rubber comes off the line at 180 degrees and takes several days to cool off," he says. "Some of the plastic pallets we tried actually melted flat to the floor."

The new heavy-duty pallet holds up well under both conditions.

About 80% of U.S. Rubber Reclaiming's customers are leading tire makers located throughout the US and Canada. The pallet loads are transported on company-owned trucks to the tire plants. The truck picks up empty pallets upon delivery, completing the returnable loop.

The company has been extremely pleased with the durability of their new pallets.

"It has been a solution to a very serious problem for us," says LaGrone. "We couldn't be happier."