Is another pallet pool in the offing?

With a new Costco pallet spec right around the corner, seven members of the National Wooden Pallet & Container Association (http://www.palletcentral.com), the trade association that represents pallet manufacturers, are betting that there’s room for a new independent pallet pool. The initiative is known as the Pallet Industry Management System project—or PIMS (http://www.pimspallet.com)—and would establish an independent, free market pallet pool to compete with the Big Three of the pallet pooling industry: CHEP, iGPS and PECO.

“The idea is to establish a pool where the pallets are repaired to a very high standard of quality and end users aren’t tied into a leasing agreement,” says John Swenby, the managing partner of the Paltech Enterprise Group (http://www.palletsales.net) and one of the members of the development team for PIMS.

While NWPCA members have been batting around the concept of creating their own pallet pool for several years, the catalyst is the new Costco spec. As Modern reported last month, starting in January 2011, Costco is requiring its suppliers to use a pallet from CHEP, iGPS or PECO, or an alternative pallet design that is equal to or better than the pallet pool specs based on an analysis using the NWPCA’s Pallet Design System.

Depending on whom you talk to, pooled pallets offered by CHEP, iGPS and PECO account for 80 to 85 million of the pallets in circulation in the United States. While that sounds like a big number, pallet pooling is still a niche, representing about 20% of total pallet usage, according to CHEP.

Those figures are consistent with Modern’s pallet survey, which found that only 33% of readers said they were participating in some kind of pallet pool, and only 34% of those were renting their pallets from one of the big three pooling providers. The remaining readers were using a third party to manage a pool of captive pallets or were handling it in house. However, more than half of our readers said they would consider using a pallet pool, especially if their customers required it.

The Costco pallet spec could create that demand for more pool users, especially if there are no contracts required, according to Swenby. “We’re still working out the details, but our goal is to maintain a very high standard of quality, similar to the Canadian and European pools, and create a logistics network that can get the pallets back into the system quickly,” he says.

It is a large undertaking, but Swenby believes the pool could be operational in early 2011. “There are 800 NWPCA members who are already familiar with our goals and objectives and some 3,000 pallet makers and recyclers in the country,” he says. “That’s a deep infrastructure we can tap into.”

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