Pallets: Supporting the Industry

The wood pallet as we know it today has been around for more than half a century. It was developed to work with the mechanized forklift with its two metal fingers that efficiently lift the pallet and its load. For the most part, pallets were considered waste because of their low cost.

Pallet handling began to change as more solid waste disposal restrictions were enacted and as companies looked for ways to operate more efficiently. As time went on, pallets became a vital commodity and were reused more, repaired when broken and recycled.

The reuse of pallets was greatly aided by the unofficial adoption in the material handling industry of a standardized pallet. That pallet, a 40- by 48-inch design, allowed a free exchange of pallets across many different industries. It is often called the Grocery Manufacturers Association or GMA pallet, because it was thought to have originated in the food and beverage industry.

An official standard specification for pallets, however, does not exist, according to Sam Baker, director of technical services for the National Wood Pallet and Container Association, Arlington, Va., although there have been past attempts to establish technical specifications.

Another event that has forced companies to pay close attention to their pallets and how they use them has been the recent increases in wood prices. Those same price increases have also made plastic and corrugated pallets more attractive to companies.

Of the 425 million pallets made during 1994 in the U.S., about 91 percent were made from wood. Only the home construction industry uses more wood than the pallet industry.

"Despite the price increases, wood is he most widely used because it is still relatively inexpensive, versatile and highly recyclable," says Baker. A wood-en pallet can cost between $7 and $10.

Wooden pallets are also durable and can be used many times over. If a board breaks, a new one can be easily nailed back on as a replacement without degrading the integrity of the pallet. "Plus, they can be built to any size fairly easily without going through a major manufacturing process," says Baker.

However, increased automation is being employed by many pallet companies that use assembly lines to sort the pallets by size, cut through the nails, then replace the damaged boards, according to Kenny Allgood, executive administrator of the International Association of Pallet Recyclers, Arlington, Va. At IAPR's annual meeting last December, automation was a central topic.

Wood is also highly recyclable, but wooden pallets require denailing before they can be shredded. Most wooden pallets that are at the end of their useful life are shredded for mulch, fuel, low grade pulp or use in particle board.

"Our progression, and the progression of most pallet recyclers, is to reuse, repair and recycle," says Steve Sykes, president and owner of Interstate Pallet, Richmond, Va.

Overall, about 83.3 million pallets were recycled in 1993, up from 65.8 million pallets in 1992, according to Allgood.

In addition, the pallets that were recycled in 1993 contained about 1.24 billion board feet of wood. An estimated 125.3 million of that was shredded, says Allgood.

One way to encourage a more efficient use of pallets is to develop a national network to track pallets. That approach is being taken by Pallet Recycling Associates of North America Inc., headquartered in St. Paul, Minn. PRANA, which was incorporated in 1993, has grown from zero to 27 locations in just 22 months, and has had more than 100 pallet companies express interest in joining the PRANA network recently.

PRANA officials says that the creation of a national pallet company is necessary to respond to an emerging national market and existing competition for that market, while continuing to serve both regionally and locally. Under PRANA’s network, acquired companies can retain their original name and management, and new start-up branches will be added to fill gaps. "The pallet market is very fragmented," says Amy Willmert, director of communications for PRANA, "and we are trying to change that so that a company can source pallets through one point of contact."

The main goal of PRANA is to create a closed-loop system for wooden pallets. By using its various member company outlets, PRANA is able to track pallets and ensure they are used more efficiently. The network is needed, according to Jeff Otto, PRANA’s founder and current CEO, so that customers only have to deal with one company for their pallet needs.

In addition, Pallet, Pallet, Toronto, and Sun Coast Pallet, Tampa, Fla., are following similar strategies to acquire existing outlets. Others are relying on only formal agreements to build a national network. Reportedly, a new network, called Pallet Alliance, is in the works and will be a co-op of independent pallet recyclers and manufacturers.

"Networks are needed today in order for companies to compete," says Norm Davis, president and owner of Robinson Pallet, Woodbine, N.J. He is considering aligning with Pallet, Pallet.

As for recycling, Davis stresses repairing, not shredding. "Before, we were shredding hundreds of pallets at a time," he says. "Now, we do not shred anymore. Just about every pallet that comes back here can be fixed, and that is where our emphasis is today. We haven’t shredded a pallet since July."

An alternative to the wooden pallet is one made from plastic. Plastic pallets can be made from a molded process or assembled from plastic lumber; and they can cost from $10 to $50, depending on size and construction. These types of pallets are the most expensive of the various pallets on the market (except for aluminum pallets that are used in only highly specialized and controlled environments), but also have the longest life cycle.

One company that is making inroads in the pallet market with its unique repairable plastic pallet is NUCON Corp., Deerfield, Ill. The company uses a molded top and bottom connected by molded cylindrical posts that fit into prearranged holes. The pallets are made from 35 percent to 50 percent recycled HDPE resin, and the company currently uses about 10 to 20 million pounds of recycled HDPE per year to manufacture 500,000 plastic pallets.

In a few months, the company is expected to open its new $7 million, 49,000-square-foot manufacturing facility in Pleasant Prairie, Wis., which will produce 800,000 pallets annually. The plant will have a full-scale plastic recycling operation.

"Cost is the first, and probably the biggest, barrier that we face," says Brandon Pigott, executive vice president of sales and marketing for NUCON. "Our pallets can cost between $25 and $50, but they also come with a five-year warranty and I expect them to last for 10 years or more."

The NUCON plastic pallets also mirror the progression of wooden pallets because they, too, are reused, repaired, and then recycled. Pigott says it costs about 50 cents to replace a supporting leg on his pallet, and once at the end of their useful lives, the pallets are ground into flake to make new pallets.

The other barrier still inhibiting the wider use of plastic pallets is their higher value. Because of this, companies are worried about losing them after shipments. "Companies want to make sure that they get their pallets back, and we are working on that issue to provide a network and a closed-loop system," adds Pigott.

Pigott believes that there is a movement of companies switching to plastic pallets because of a diminishing worldwide forest reserve, especially in Europe and Asia.

Pallets made of corrugated cardboard are also trying to make headway in the marketplace. These pallets are surprisingly strong and easily recycled. However, corrugated pallets command only about 1 percent of the pallet market.

"People simply think corrugated pallets can’t do the job," says Art Wagner, sales manager for Smurfit Pallet Systems, Crown Point, Ind. "In the past, poor corrugated pallet designs encouraged that view. Now we have to break through that barrier and sell against the failures of the past." Smurfit’s corrugated pallet that can handle a dynamic load of up to 2,800 pounds.

Corrugated pallets, which can cost between $4 and $10, are 100 percent recyclable and can be used 100 times or more.

The benefits of using a corrugated pallet include its lightweight design – about one-fourth the weight of wood – thus reducing lifting efforts and freight costs. Corrugated pallets also use glue and no staples or nails, which means there is less packaging damage. Finally, corrugated pallets are more shock absorbent than wood or plastic pallets.

The major drawback occurs when the pallet is damaged so badly it cannot be repaired, so it has to go out of service. Another area that has to be considered is outside storage – corrugated pallets don’t hold up too well after a long, hard rain.

Overall, consolidation in the pallet industry will continue, and Baker predicts only half the companies in business today to be in business 10 years from now. Pallet companies will also have to be full service, providing manufacturing capabilities, pallet recycling, tracking and pickup and delivery services on a broader basis.

The author is managing editor of Recycling Today.