Bob Trebilcock

Building the better pallet

Plastics.

If you’re my age, you might remember the one-word piece of advice passed along to Dustin Hoffman in The Graduate. Get into plastics and you were sure to make a bundle.

Pallets.

That’s my one-word piece of advice. There are billions of them floating around out there. Most users view them as a necessary evil. The guy, or gal, who comes up with an alternative that delivers the same level of performance for the money as the wooden pallet stands to make a bundle even in this economy.

(Here’s where I insert my usual confession: I grew up in the pallet business, and while I’m no longer involved, I have family members who make, repair and sell wooden pallets along with other industrial products and end of the line packaging systems. Buyer beware.)

Over the years, I’ve talked to any number of entrepreneurs who thought they had the pallet problem licked. I’ve seen plastic pallets, metal pallets, corrugated pallets and pallets made from recycled newsprint. They’ve all had their pluses. But at the end of the day, wooden pallets still reigned supreme.

A couple of weeks ago, I talked to Tom Clinton and Bill Vitti, the executives behind ALEX Pallet Systems (www.alexpallet.com).

Together they believe they have come up with the better pallet, an engineered aluminum shipping and storage pallet based on advanced automotive and aerospace technology. According to Clinton and Vitti, the pallet is significantly cheaper than wood or plastic over the life of the pallet, which can last 20 years. 

Aluminum pallets do have their advantages: They are flame retardant which can lower insurance premiums. They can be washed, which makes them ideal in sanitary environments. They work well in automated materials handling systems. And because they don’t have nails or boards that can break, product damage is likely to be less with aluminum than with wood.

The sticking point with any alternative to wood has always been price: The upfront purchase price of metal pallets, like plastic pallets, is more than wooden pallets. Someone's got to make a convincing argument to the board that it's worth spending thousands, sometimes millions, to scrap their wooden pallets for something else.

While we didn’t talk dollars and cents, Clinton and Vitti argue that the total cost of ownership of their pallet over time offsets the upfront cost of the pallets today. A lot of that savings comes from lower inspection and repair costs for the aluminum pallet versus wood, or even plastic. On top of that, at the end its usable life, an aluminum pallet has a scrap value since it can be recycled.

Their plan is to offer the pallets for sale, for lease or on a per-trip basis as part of a managed pool.

The pallet looks great. The question is whether Clinton and Vitti can convince companies to scrap their inventory of wood or plastic pallets, or their pooling arrangement, to go with aluminum.

I’ll be interested to learn more as they expand in the market.

Let me know if you’re company is looking at alternatives to wooden pallets by sending me an e-mail at Robert.Trebilcock@verizon.net or posting a reply below.

Posted by Bob Trebilcock on October 20, 2008 | Comments (2)