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Taking Stock on Pallets

- Taking stock on Pallets - 

 

Taking stock on Pallets 

 


 

A Short History of Pallets…

Pallets in some shape or form have probably been around for 100’s of years, but the pallet in its modern-day form first emerged in the 1930’s. Before then, a number of patents had been registered for various load-bases, but it was George Raymond & Bill House who were the first to patent a design for a pallet constructed from inexpensive wood (devoid of metal legs or stringers) featuring gapped spacing of bottom deck boards allowing it to be handled by forklifts and pallet trucks.

 

 

By the 1940’s the uptake of pallet use was still relatively slow, but with war looming and the realities sinking in that large quantities of products and loads will have to be moved quickly at a time when the workforce would be largely depleted (due to men serving as soldiers), alternative methods of material handling became of paramount importance.

It was with this dramatic backdrop of crisis and uncertainty, as the World went to war, that pallets were catapulted into the forefront of the logistics chain serving not only as a courier in times of war but later, when peace came, as a platform that would carry the world.

The role that pallets have played in the development of the supply chain cannot be overstated and it seems fair to say that the lowly pallet was a key part of revolutionising materials handling.

What is a Pallet?

A pallet is a flat structure used as a base for the automated or manual handling of goods in the supply chain. It is used in a myriad of ways, including the storage, protection and transport of goods, while being moved by materials handling equipment such as forklifts, pallet jacks or conveyors. Essentially, pallets enable the better flow of goods through the package life cycle.

The pallet is the most common base for the unit load, which includes pallet and goods stacked on top of it, typically secured by stretch wrap, strapping, shrink wrap, adhesive, pallet collar, or other means of unit load stabilization.

Advantages of using pallets

Products that have been palletised can be moved more easily and quickly, as opposed to the manual handling of individual cartons. Benefits of this quicker handling include; transport efficiency, reduced labour requirements and increased operational efficiency. The reduced manual handling of pallets therefor results in less risk of damage to products as well as a decrease in risk of worker injury. In addition, palletised products can be moved and stored more efficiently in warehouses and are typically easier to handle with material handling equipment such as forklifts. Pallets provide drainage and circulation for commodities, such as fresh produce, and customers typically also prefer receiving palletised goods.

Expendable Pallets may only be used once or a few times. They are most often lower quality wood and may lack some of the strength, structural integrity and durability of Reusable pallets. These pallets may be recycled or end up in landfill.

Reusable Pallets can offer a lower pallet cost per trip, depending upon the cost of pallet retrieval, and of necessity also include pallet management which can take various forms; including self-management or 3rd party management which may involve customized systems or pools, such as CHEP.

Pallet Sizes

Pallet sizes vary widely, depending upon the intended application. Many standard pallet sizes exist for specific industries, pools or geographic regions, such as the 48×40 inch pallet in North America, or the 800×1200 mm pallet in Europe, offer opportunities for pallet recycling, extending the useful life of pallets for re-use across supply chains.

The International Standards Organization (ISO) maintains six standards for pallet dimensions to account for sizes commonly used in various countries.

New Sizes for a changing market

The most common size pallet in use in South Africa measures 1200mm x 1000mm, but there is a growing demand for ‘shop ready’ packing solutions. This has resulted in the introduction of half-size (48 x 20 inch) block pallets, which are said to be ideal for in-store merchandising.

Projections show that over the next 5 years, nearly 60 percent of stores opened in the United States will be small format, and with this growth, companies are looking for ways to reduce unloading time and speed up merchandising time in these smaller stores that typically have narrow doors and no receiving dock.

Small Format Distribution Pallets, which minimizes touches, allowing drivers and store employees to optimize the delivery and merchandising process, are set to gain popularity, which is believed to ultimately provide employees with more time to spend on assisting customers.

Pallet Materials

Wooden Pallets

Wooden Pallets Wood is the most common material that pallets are constructed from. They are generally less expensive and relatively easy to repair since parts are interchangeable and can be removed and replaced when required. Pallets made of wood have some resale value and they can be recycled into mulch and paper. In addition, constructing a wooden pallet is quick and easy and they have a higher friction compared to plastic or metal pallets.

Some disadvantages of wooden pallets are that they are very difficult to clean and if they get wet the chances of bacterial and fungal growth is very real. The structural integrity of wooden pallets can also be problematic with splintering, shrinking and warping being common while fasteners such as nails can cause serious damage or even injury when they protrude or are broken.

It is estimated that wooden pallets make up the 8th largest component in landfills internationally.

Plastic Pallets

Plastic pallets are not subject to the same level of regulation as wooden pallets are and generally have a lifespan of more than 10 years. Their resistance to chemicals such as acids and alkalis and can be easily cleaned (hot washed, steam cleaned or chemically sanitised) to remove bacteria and are 100% recyclable. These pallets limit the spread of foodborne illnesses and do not absorb harmful pathogens like Salmonella, E.coli or Listeria.

Plastic pallets provide forklifts with a four way entry for lifting and they have none of the common problems often associated with wooden pallets, i.e. splintering, warping and nails or screws coming loose. Pallets that are made from plastic are also up to 30% lighter which translates to a direct cost saving on shipping.

Plastic pallets are more expensive than wooden pallets and if they crack or break they cannot be repaired easily. Even so, these costs may well be offset by the savings ensured through keeping the products well ventilated and protected from bacteria and chemicals where appropriate. This is especially valuable in the food and beverage industries where corporate reputations are at stake and peace of mind needs to be maintained when shipping. The fumigation or heat treatments that is often required by wooden pallets, in order to comply with ISPM-15, can make the wooden pallets more susceptible to mould and other toxins. Plastic pallets are ISPM-15 exempt and do not require such treatments.

Factors to consider when choosing Pallets for your load.

1. Understand the differences between wooden & plastic pallets.

Wood pallets are recyclable, can be repaired, are less costly, and can hold more weight than plastic. But they also give off moisture, splinter, harbour bugs, and contain fasteners that can damage products. Plastic pallets are durable, clean, bug-free, weather resistant, contain no fasteners and are fully recyclable. However, they are also more costly than wood, are not easily repaired and are not as stiff.

2. Consider the needs of your industry.

Industries that operate in closed-loop warehouse environments often use plastic pallets. Because their pallets are returned, the following industries purchase plastic pallets to maintain costs.

3. Determine the weight of the products you ship.

Plastic pallets are most suitable for shipments weighing less while wooden pallets are best for heavy items.

4. Evaluate your pallet management system.

If you use wood and are not in a closed-loop system, consider using a third party to pay per trip rather than per pallet, and transferring that cost to your customer. If you use plastic, you should get your pallets back. If you are unhappy with the return rate, consider outside pallet management.

5. Be cognizant of environmental impact.

Plastic pallets have a longer shelf life and go back into the system, but if damaged they cannot be repaired; they are made from oil and must be melted down to be recycled.

6. Think about how fragile your product is.

Wood pallets have fasteners that can cause problems with fragile items. If you ship paint cans, for example, fasteners can come loose, puncture the cans, and cause product damage. In that case, plastic is the better choice for the product you move.

7. Determine if pallets will serve a dual purpose.

Will your pallets also be used as a store display? The electronics industry utilizes plastic pallets for shipping because, in many cases, the pallet becomes a display and then is picked up and returned to the distributor.

8. Examine trade-off costs.

If you move fragile products, weigh the cost trade-off. Is the cost of a pricier pallet higher than the cost of damaged products, shipment delays, and disgruntled customers?

9. Understand warehouse fire codes.

Plastic pallets burn at a much higher temperature than wood. If you invest in plastic, make sure you understand the fire codes and purchase UL-listed plastic pallets.

10. Educate yourself on new exporting rules.

For shipping overseas, use wood pallets. You won't get the pallets back, and the cost of plastic could be prohibitive. New rules govern exporting shipments on wooden pallets, so familiarize yourself with ISPM 15 code regulations. These regulations may well make it prohibitively expensive to use wooden pallets for exports.

In addition to the above, not only the physical properties of the pallets chosen, but also how they fit into the systems in which they will be used must be considered. These include; the material handling equipment, warehouse racks, trailers and containers they will encounter in facilities, as well as those of trading partners. Consideration also needs to be given to their lifecycles: How will you ensure the right pallets are in the right places in the right quantities at the right times? Who will be the right partner to deliver on those needs?

Pallets for EXPORTING

Will your pallets also be used as a store display? The electronics industry utilizes plastic pallets for shipping because, in many cases, the pallet becomes a display and then is picked up and returned to the distributor.

In a globally connected market, pests can quickly reach every continent and harm the local agriculture and forests. With this in mind, ISPM 15 (International Standards for Phytosanitary Measures) guidelines have been created to regulate wood packaging material in international trade to prevent the spread of pests. These guidelines require measures such as heat treatment or fumigation to eliminate pests and to protect the wood against new infections. Plastic pallets do not require special treatments as would does.

Why are Plastic Pallets a good choice for exporting?

  • ISPM 15 exempt
  • Light weight (air freight and manual handling benefits)
  • Competitive pricing
  • Consistent sizing and weight (of a given model)
  • Plastic pallets do not need to be treated
  • Nestability to reduce freight costs and empty storage space in the facility
  • Made from recycled plastic and totally recyclable
  • Many styles and sizes available
  • Can be stored outdoors
  • Cleanliness (no debris or splinters)

Calculating ROI when considering a transition from Wood to Plastic Pallets

No single factor consistently influences supply chain decisions as much as cost reduction. However, in order to understand the real cost of using plastic vs. wooden pallets, it is necessary to calculate the real ROI of this system, by determining the following:

  • What is your current monthly spend on purchasing non-plastic pallets?
  • Do you use refurbished pallets? What are your monthly repair costs of non-plastic pallets?
  • What is your monthly cost of damaged product due to broken non-plastic pallets?
  • Determine your monthly cost for lost hours due to work injuries from non-plastic pallets. This includes anything from splinters to back injuries incurred by employees while lifting and moving wood or metal pallets by hand, also consider what points of entry the pallets (need to) have.
  • Calculate the monthly cost of hours associated with purchasing / warehousing / receiving / freight transportation required for expendable non-plastic pallets.

Having considered the above, also factor in the following:

  • One-way (expendable) wood: Return logistics and plastic pallet lifetime vs once off high capital cost. Expense vs capitalise.
  • Returnable wood: Rental option, similar to above. Expense vs capitalise.
  • Returnable wood: Own. Lifetime of wood vs plastic.

Once all these costs have been calculated and collated you can do a payback calculation by dividing the acquisition cost of plastic pallets by the monthly cost of non-plastic pallets. 
The resulting number is the number of months it will take for you to get your Return on Investment.

Pallet pooling is on the rise

When it comes to pallet use trends, organizations are under many of the same pressures that influence other supply chain decisions. Factors such as customer compliance, reliability or the case of pallets—strength and durability—rank highly, but price and cost control tend to rule the day. Trends like pooling appear to be growing in importance, but all these factors play out under the backdrop of keeping cost manageable. A recent Survey by MHH reports that pallet pooling is on the rise, and a substantial number of businesses have confirmed that they are either using a pallet rental company or that they have a pallet retrieval or recovery system in place. Pallets both facilitate logistics and require logistics. Pallet pools can be an excellent way to serve the needs of an entire supply chain with a pallet tailor-made for the properties of its products. Pallet systems must be carefully managed to not only ensure the right pallets are in the right places at the right times, but that they are properly cleaned and kept in good repair. Understanding the entire supply chain is critical to a successful pallet pool, as is working with all supply chain partners.

Key to successful pallet pooling is maintenance, since these pallets need to regularly be inspected, cleaned, and repaired every time they cycle through. Pallet quality must be maintained to the highest standards of quality which often requires continued investment, research and development. Accordingly, a customer-centric culture focused on creating strong supply chain relationships is essential.

CASE STUDY: Pallet Pooling in Poland

Traditionally, Central and Eastern European countries (CEE) rely on the standard white wood exchange pallet as a shipping platform, but more and more manufacturers serving these markets are replacing white exchange pallets in their supply chain with pooled pallets, in order to reduce their cost and environmental impact. Throughout CEE there is an increase in partnering with a pallet supplier that offers effective pallet management, cost and unique sustainability benefits.

Nivea Poland realised in 2011 that it’s overall supply chain costs were climbing higher using white exchange pallets. It needed a pallet supplier that could take over repairing, replacing, collecting and managing pallets, plus deliver cost and sustainability benefits to the environmentally conscious manufacturer. They looked to CHEP for a managed pallet pooling solution to replace white exchange pallets, and in the same year made the transition to CHEP after completing an extensive cost analysis of pallet systems and finding that overall CHEP is more cost effective than pallet exchange, plus pooling offers significant sustainability advantages.

CHEP managed pallet pooling continues to be an ideal solution for Nivea Poland, one that avoids the negative issues common to white exchange systems. The company is using CHEP quarter pallets for flows of pre-packaged promotional displays to retailers. These platforms are part of an innovative palletisation system designed to streamline supply chain operations, while delivering higher sales and increased on-shelf availability in retail stores.

NIVEA will be using CHEP industry standard B1208A pallets (1200x800mm) for exports and for domestic deliveries pre-packaged P0604A display quarter pallets (600X400mm), which have proven to build brand awareness and increase the company’s sales significantly.

Display pallets are well established across Western Europe, where they have become popular merchandising tools, especially in supermarkets. They are widely used to transport beverages, cosmetics, confectionery and home-care products and display them in retail stores. Display pallets have been shown to increase brand awareness and generate impulse purchases. Manufacturers benefit from better exposure to the consumer and, for retailers, “stock-out” occurrences are dramatically reduced with the use of display pallets.

NIVEA Poland introduced CHEP pooled pallets in 2011 for their export business, after the company completed a cost analysis of pallet systems. Rather than look at pallet costs alone, they considered the overall supply chain costs and found that CHEP is more cost effective than pallet exchange and offered improved sustainability benefits. Retailers were also involved in the decision to move to CHEP, and the transition went smoothly. In 2013, the partnership extended with the addition of quarter pallets to their distribution in local markets.

CHEP’s quarter pallet, designed for promotional displays, is an innovation that came out of “Last Mile Solutions” workshops that CHEP conducted with supply chain partners in 2011.

The “last mile” refers to the final portion of the supply chain through which a product travels before it is displayed in store by the retailer.

Implementing your own Returnable Transit Packaging (RTP) Pallet Pool

Some of the most important reasons for implementing your own RTP Pallet Pool are…

1. Financial

Some of the most important reasons for implementing your own RTP Pallet Pool are…

2. Environmental Benefits

RTP allows an opportunity to reduce your company’s carbon footprint. Through the minimising of packaging, thus adhering to the precepts governing Packaging Waste Legislation, the consequent reduction in waste and possible landfill charges has immediate cost savings and contribute to overall profitability.

3. Savings in Transport & Handling

Inherent in the design of RTP is the ability to be stacked or collapsed which reduces storage and transport space, together with their additional costs. In addition, the more efficient design of RTP units allow for space saving through stackable and nestable containers.

4. Greater Protection

Product being transported in returnable packaging is less at risk of being damaged since RTP is more durable and robust, making it the ideal solution for transporting fresh, perishable and valuable products. These containers can then be hygienically washed and returned into the pool loop.

5. Customised Solutions

Customer needs can be put first with specific material handling needs met through customisable containers that meet specific requirements in terms of size, distribution and health & safety needs.

6. Conservation

Economic and environmental benefits are garnered through the conservation of energy and raw materials throughout the supply chain, such as lower energy consumption compared to the energy costs associated with recycling cardboard and timber.

7. Pooling Resources

Pooling of a shared resource enables companies to concentrate their efforts, energies and resources into their core business while still having the control and flexibility to make full use of RTP benefits.

8. Product Hygiene

Upon delivery, used plastic pooled containers can be collected and washed before being re-inserted into the supply chain for re-use.

9. Tracking Systems

Returnable Transit Packaging solutions are compatible with in-transit monitoring systems which allows for greater and more effective control and management of the closed loop system. In essence, product can be tracked either in transit or by receiving locations for the monitoring of deliveries and their collection.

10. Flexibility of Service

Seasonal peaks and troughs in product volumes can be easily catered for since stock-holding can be managed accordingly, depending on the specific needs at any point in time.

Looking to the Future…

Industry Forecast and Trends towards 2020…

Wooden pallets are expected to maintain its dominance over the next decade, but plastic pallets are likely to witness its highest growth in the next few years. North America is will maintain its dominance in the forecasted period while Europe is expected to show marginal growth.

Wooden pallets are expected to maintain its dominance over the next decade, but plastic pallets are likely to witness its highest growth in the next few years. North America is will maintain its dominance in the forecasted period while Europe is expected to show marginal growth.

The Asia-Pacific region is going to witness the highest growth over the next 5 years due to increasing domestic demand from manufacturing companies. This type of growing demand from the end-user industry is expected to be the major driver for the global pallets market. Increasing investment in the manufacturing facilities, especially in the emerging countries such as India and China, is expected to increase demand for pallets in the global market.

Additionally, rising demands from the automobile and packaging industry is expected to provide growth prospects for the pallets manufacturing companies in the coming future. However, infrastructure facilities (or the lack thereof) in some of the countries may hamper the growth of the pallets market.

Pallet trends include initiatives to take additional weight and material out of pallets without compromising performance, as well as auto-ID, notably the fixing of RFID tags on pallets. Additionally, pallet pooling companies are finding synergies by merging with reusable container providers in order to broaden their complementary offerings.

Pallet Demand is Rising

The pallet market is tied closely to the economy and factors such as population growth and the rise in disposable income, according to TechNavio's report, Pallet Market in the U.S. 2014-2018. While the economic downturn slowed growth between 2007 and 2012, TechNavio expects increases as the economy improves.

Preferences are shifting to block designs over stringers

The pallet industry is seeing a shift in preference from stringer to block styles. Large retailers are helping to drive this shift through block pallet requirements, with predictions that block pallets will account for a large proportion of the market by 2018.

The importance of sustainability will keep increasing, causing environmental considerations to grow more

As with most products, determining what pallet material will fit best with sustainability goals, in addition to fulfilling supply chain requirements, is a complex exercise. Each material delivers both benefits and trade-offs, and pallet system operators can offer detailed data to use in this calculation.

Pallets can be high-tech

RFID chips can now be embedded in some pallets, enabling the pallet's unique serial number or Global Returnable Asset Identifier (GRAI) to be read by RFID readers, which don't require a line of sight to the tag. They also encode that information into the pallet's bar code.

MPACT PALLETS

It seems clear that the market for plastic pallets is growing and will continue to grow substantially over the next decades. Mpact is a leading supplier of plastic containers to the Southern African market. Mpact’s plastic pallets cater for a variety of demanding environments and offer different performance specifications for various applications.

The diverse selection includes standard-sized hygiene pallets as well as more innovative, nestable designs. These lightweight pallets are robust and offer an efficient alternative to existing wooden products.

The Range Includes:

Nestable Pallets

Even weight distribution is ensured by a complex honeycomb design that is forklift friendly, allowing a 4-way entry. The fully recyclable pallet is waterproof, hygienic and easy to clean, making it ideal for food and wine exports. Nestable pallets are competitively priced, making them an attractive option for returnable transit packaging.

Pallet Stringer

Pallet stringers clip onto nestable pallets in order to give the pallet added rigidity when required. The use of these stringers allows for a more even load spread when stacking pallets.

HD Hygiene Pallet

HD Hygiene pallets are manufactured from food approved materials and are specified for HACCP environments.

Slip Resistant Pallet

Designed to keep product secure on an anti-slip top deck. The pallet is sturdy, dimensionally stable and durable.

Eco Pallet

Manufactured from impact modified polypropylene, the D3 pallet range is UV-stabilised and fully recyclable.

Click Here to find out more.

REFERENCES:

http://www.inboundlogistics.com/cms/article/selecting-pallets-wood-vs-plastic/

http://www.custombuiltpallets.com/plastic-vs-wood-pallets.php

http://www.aalhysterforklifts.com.au/index.php/about/blog-post/Plastic_pallets_vs_Wood_pallets

http://cerasis.com/2013/07/30/plastic-pallets/

http://www.dacocorp.com/woodversusplastic.php

http://sanpallets.com/plastic-vs-wood-pallets-what-to-consider-when-calculating-roi/

http://www.litco.com/news/pallets-2/2013-pallet-usage-and-trending-survey.htm

http://www.mmh.com/article/pallet_survey_how_pallet_trends_stack_up

http://www.chep.com/pallet_pooling_benefits_win_contract_renewal_poland/

http://palletenterprise.com/view_article.asp?articleID=4309

http://www.inboundlogistics.com/cms/article/an-expanding-palette-of-pallet-choices/

http://www.whatech.com/market-research/transport/68998-global-pallets-market-size-share-trends-analysis-and-industry-forecast-to-2020-scrutinized-in-new-research

http://packagingrevolution.net/pallets-introduction-to-pallet-usage/

http://packagingrevolution.net/why-use-pooled-returnable-transit-packaging-10-top-reasons/

https://en.wikipedia.org/wiki/Pallet#ISO_pallets

 

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