Wooden pallets: Everything old is new again

The last ten years has seen a changing of the guard in the wood pallet industry. Used pallets, once the ugly stepchild of the business, have slowly but steadily come to dominate the market. While no one tracks just how many used cores, as they’re known in the industry, are out there, Bruce Scholnick, president of the National Wooden Pallet & Container Association ([url=http://www.palletcentral.com]http://www.palletcentral.com[/url]), estimates that used product currently makes up about 70% of the market. For sure, part of the current increased demand for used cores is driven by a temporary shortage of lumber. That’s driving up the price of manufacturing new pallets. “At some point, prices will come down and you’ll see more new pallets come into the market,” says Scholnick. He adds that the pool of available pallets needs an injection of new pallets to make up for those cores that no longer qualify as a number 1 recycled pallet – the highest quality, the most in demand and also referred to as an A pallet – and those that are beyond repair as a number 2, or B, pallet.

Still, there’s no question that in today’s market, a majority of the pallets are recycled and remanufactured. The reason is simple, according to Steve Curci, manager, reverse logistics services, Rehrig Penn Logistics ([url=http://www.rehrigpenn.com]http://www.rehrigpenn.com[/url]), a subsidiary or Rehrig Pacific. “It comes down to price, price and price,” he says. “If you’re talking about 48” by 40” grocery pallet, a number 1 recycled pallet may be 30% cheaper than a comparable new pallet, and a number 2 pallet may be 60% cheaper than new or more.”

For companies focused on sustainability, recycled pallets are green, adds Lee E. Evans, a supply integration specialist with Millwood Inc., ([url=http://www.millwoodinc.com]http://www.millwoodinc.com[/url]), a manufacturer of new and used pallets. “A used pallet is going to be repaired and recycled until it can no longer safely transport product,” says Evans, who has seen 15-year-old pallets in the field. “At that point, we’re going to dismantle it and use the good components for other repairs. Whatever we can’t reclaim, we’re going to turn into mulch, animal bedding or biofuel. We’re even going to save the nails and sell them as scrap metal.” In other words, very little wood is wasted these days.

Still, not everyone uses new pallets. Here are some of the most important considerations when deciding to use new versus used pallets, according to Curci and Evans:

Keep the customer satisfied: The number one reason some manufacturers still ship on new pallets is that their customers demand new pallets. That is especially true for manufacturers shipping to some leading big box retailers.

Working with automation: Automated materials handling systems require consistent pallets. When it comes to meeting specs, used pallets are like horseshoes and hand-grenades: close enough is good enough. A used 48 X 40 grocery style pallet, for instance, may be 39-1/2 inches wide or 40-1/2 inches wide. The number and spacing of deck boards may vary from pallet to pallet. Those deviations from the spec are fine for floor storage, but a pallet with the wrong deck board configuration or one whose dimensions are out of spec can bring a conveyor line or an automated storage and retrieval system to a screeching halt. Downtime can cost far more than you can save buying used pallets.

Regulatory compliance: Some highly-regulated industries, like Big Pharma, predominately use new pallets to comply with government regulations that require certificates of origin for the pallets or they treated pallets.

Rack strength is required: Even a number 2 quality used pallet works fine for storing product on the warehouse floor. In fact, some retailers specializing in surplus and overstocked goods prefer them to save money. But for companies racking their pallets, new is still often the shipping platform of choice for safety reasons.

Odd sizes: For companies shipping to industries with standard pallet specifications, like the grocery, automotive, glass, can or chemical industries, used pallets are a dime a dozen – sometimes literally – and are usually available in quantity and on short notice. For them, used is clearly the way to go. If you’re shipping on a non-standard pallet size, there’s less likelihood that you can find enough good used pallets on a consistent basis to keep up with your demand; and, when you’re done with the pallets, it’s less likely that a pallet recovery service will be interested in taking them off your hands. In those instance, new might be the better choice.

The bottom line: Anyone shipping on a standard size pallet, looking to minimize their shipping costs, and who has a book of customers that will accept them, used pallets offer a huge benefit. If not, you may still need to look to the new pallet market if you’re going to use wood, or to plastic or metal pallets as an alternative to wood. We’ll look at those next.

Want to learn more about pallets? Join pallet experts as they put context behind the findings of Modern’s 2010 Pallet Usage and Trending Study Webcast on October 28, 2010 at 2 pm ET.