Susan Lacefield has been working for supply chain publications since 1999. Before joining DC VELOCITY, she was an associate editor for Supply Chain Management Review and wrote for Logistics Management magazine. She holds a master's degree in English.
For years the debate has raged in the pallet industry: Which is better, wood or plastic? As recently as five years ago, the answer could be boiled down to which was more cost-effective for a particular company's operations. But then Wal-Mart came out with a scorecard that rated its suppliers on the sustainability of their packaging, and suddenly it seemed that the question everyone was asking was: Which is greener, plastic or wood?
It's an easy question to ask, but a hard one to answer. To make the assessment, experts say, you really have to consider the pallet's entire life cycle from cradle to grave. Here are some of the key points to consider:
• How eco-friendly is the raw material? Wood pallets are made from lumber, a renewable resource, whereas plastic pallets are made from high-density polyethylene (HDPE), which is created from petroleum or natural gas. While this simple fact would seem to favor wood, some pallet companies say it's actually more complicated than that.
For example, Bob Moore, president of iGPS (Intelligent Global Pooling Systems), a plastic pallet pooler, acknowledges that plastic pallets are created from a nonrenewable resource, but he points out that the plastic used to create iGPS's pallets does not come from oil but from a resin created from natural gas. This resource, according to Moore, is so plentiful that Saudi Arabian oil refineries used to burn it off as part of the refining process. Furthermore, iGPS contends, the environmental impact of plastic pallets can be greatly reduced merely by incorporating 15 percent recycled HDPE into the pallets.
While using a nonrenewable resource like oil or natural gas to create plastic pallets has a considerable impact on the environment, so too does cutting down a tree. "I've read statistics from the U.S. Forest Service and Department of Agriculture that we cut down almost 40 percent of our hardwood in this country for single-use pallets," says Terry Tamminen, former secretary of the California Environmental Protection Agency and a member of the iGPS board of directors. "That's the very height of unsustainability."
But Bruce Scholnick, president of the National Wooden Pallet and Container Association (NWPCA), disputes that claim. "It's a total misconception that trees are destroyed merely to make a pallet," he says. Instead, trees are cut down for such things as building materials and furniture. The lumber that is left over is then used to make a pallet.
Furthermore, he says, most pallet companies are actively involved in managed forestry, which encourages reforestation and helps reduce carbon emissions over time. "In fact," says Scholnick, "there are more trees today than at any time in the last 80 years because of managed forests."
But reforestation is no instant fix, says Moore. "You can say that for every one tree that you cut down, you plant 10 more, but the fact is that you aren't planting 40-foot trees that consume 45 pounds of carbon dioxide a year," he argues."Instead,you're planting two-inch seedlings that will actually consume environmental resources for a decade."
• How much energy is consumed in making the pallet? On this, both camps can agree: Wood has the advantage over plastic when it comes to the manufacturing process. In fact, plastic pallets require five times more energy to source, process, and manufacture than wood pallets do, says Derek Hannum, director of marketing for pallet pooler CHEP. Manufacturing plastic also produces more emissions, according to Scholnick."The carbon dioxide (CO2) emissions from creating plastic are infinitely higher than the CO2 emissions from cutting the wood and making lumber," he says.
• How durable is the pallet? Most experts agree that plastic pallets last longer and can be used for more trips than wood ones, reducing the amount of raw materials consumed. For example, iGPS estimates that one of its plastic pallets will make 100 trips in its lifetime. By contrast, the company says, a wooden pallet used in a pool lasts for only 20 trips, and a single-use pallet might be used for as few as two trips. Both CHEP and the NWPCA, however, say that the iGPS numbers grossly underestimate the number of trips a wood pallet can make in its lifetime.
• How much does it weigh? Plastic pallets weigh only about half as much as wood pallets do, which has important implications for transportation. For companies that use 48- by 40-inch Grocery Manufacturers Association (GMA) standard pallets, says Moore, using plastic pallets can shave anywhere from 500 to 2,000 pounds off a trailerload's weight. "Less weight means less diesel fuel," he adds, "which means a smaller carbon footprint."
• Can the pallet be repaired? Plastic may last longer on average than wood, but wood pallets are easier to repair. "You just pull a board out and nail another one in," says Scholnick. That allows you to extend the life of the pallet for quite a number of years, adds Hannum.
It used to be that plastic pallets weren't repairable and had to be recycled if damaged. But that's beginning to change. Plastic pallet makers have recently introduced models that are designed to be repairable, and CHEP is looking into introducing repairable plastic pallets into its pool in the United States.
Although repairing a wooden pallet does extend its life, Michal Pelzig of the consulting firm Environmental Resource Management (ERM) says you still have to factor in the fuel consumed and emissions created by transporting damaged pallets to repair locations. CHEP, however, says it has gotten around that problem by locating 80 repair service centers across the nation. This allows the company to repair the pallets close to where its customers use them, says Hannum.
• Can the pallet be recycled? Wood is 100 percent recyclable, says Hannum. When a pallet can no longer be repaired, a recycler can grind it up to be used for alternative products, like mulch and animal bedding. CHEP's service centers are even experimenting with using wood waste to create fuel. Plastic pallets are also recyclable. When an iGPS pallet is damaged, for example, it is ground down, and the resulting plastic is reused to make a new pallet (although Moore says that the damage rate is so low—0.003 percent—that the company doesn't have many damaged pallets to draw from yet).
Scholnick, however, notes that there's an environmental cost to recycling plastic pallets. Even if you assume that plastic can be ground up or melted down and reused, he says, you have to account for the energy required to remanufacture that plastic pallet.
• Are there eco-friendly options for disposal? Even the proponents of plastic pallets concede that disposal can be tricky. Unlike wood, which is biodegradable, plastic has a long half-life and when it does start to decompose, it emits methane gas. For plastic pallets to be sustainable, says Moore, the user has to have reverse logistics processes in place to ensure that the pallets don't end up being thrown out. Operations that don't have those sorts of controls would be better served by using wood pallets, he admits.
Although wood pallets may not pose the same landfill hazards their plastic counterparts do, wood pallet waste is still considered a significant problem. For example, one study found that 6.16 million tons of wood pallets (or 223.6 million pallets) entered municipal solid waste and construction and demolition landfill facilities in 1995. Scholnick, however, argues that those figures are dated and do not reflect current practice. Today, most pallets are picked up by a pallet recycler rather than being dumped in a landfill, he says. And even if the pallet does end up in a landfill, chances are good that it will ultimately be recycled. "It's too valuable," Scholnick says. "Even nails are remelted."
Landfill disposal, however, may not be an option in the future. A number of states and municipalities are cracking down on the practice. For example, starting in October 2009, North Carolina will prohibit the disposal of wooden pallets in its municipal solid waste landfills.
Running the numbers
Given all these complex considerations, how can you make an accurate, nonbiased assessment of which material is more sustainable? Is it even possible to weigh the impact of using nonrenewable material to make plastic pallets against the extra fuel burned to transport the heavier wooden pallets?
It used to be that any such judgments were made solely on a qualitative basis, says Pelzig of ERM. But for the past five years, researchers have been honing a tool called a lifecycle assessment (LCA), which tries to quantitatively assess the environmental impact of a product over its lifetime. Standardized under ISO 1440 guidelines, LCAs consider factors such as how much solid, liquid, and gaseous waste is generated at each stage of a product's life.
A number of pallet makers have already commissioned assessments of their products. iGPS, for example, hired ERM to conduct life-cycle assessments of the iGPS plastic pooled pallets as well as wooden pooled pallets and single-use wood pallets. The study results, which were published in August 2008 and can be viewed on the iGPS Web site, found that the iGPS plastic pallet had a lower environmental impact than its wood counterparts in all categories assessed.
CHEP, too, has commissioned one of these studies, according to Hannum. Its study, conducted by environmental consulting firm Franklin Associates, compared the pallets used in CHEP's pallet pool system to one-way pallets, pallets used in pallet exchanges, and slipsheets. Using data from the study, CHEP created the CHEP Calculator tool, now posted on its sustainability Web site, which calculates how much a company will save in solid waste, energy consumption, and greenhouse gas emissions by switching to CHEP pallets.
The study, however, did not look at plastic pallets. Although CHEP does use plastic pallets in its U.S. operations, it uses them only in a closed-loop environment. The company elected not to include plastic units in its study because it felt that performance data gathered from pallets used in closed-loop applications might not be valid for pallets used in an open pool.
Although pallet makers have made marketing hay with their LCAs, Scholnick of the NWPCA remains skeptical of all the assessments that he has seen, saying that they are all based on flawed data. In particular, he argues that the deciding factor in most of the studies—the number of trips a pallet can make in its lifetime—is based on assumptions. "And that's totally unfair," says Scholnick. He says that the "number of trips" standard fails to take into account the resiliency of wood pallets. If a plastic or metal pallet is run over by a truck its first time out, for example, it will likely have to be written off as a total loss, he says, but wood pallets can be continuously repaired and reused.
Tamminen, too, urges companies to view these assessments with caution. He recommends having all LCAs evaluated by your environmental health and safety personnel to make sure the data comes from reputable sources and that the analysis doesn't exclude any stages of the life cycle or define the life cycle too narrowly.
Green vs. gold
For all the controversy it's stirring up, it's unclear how much effect the great wood vs. plastic debate will ultimately have on the industry. In fact, some observers say that end users aren't even all that concerned about their pallets' sustainability. Scholnick, for example, maintains that while Wal- Mart may be emphasizing eco-friendly packaging, for most other companies, it's a secondary, or even tertiary, concern. "Other customers with whom I speak, they're not talking about sustainability," he says. "They're looking for the most cost-effective option that they are certain will get their product safely from point A to point B. That's what they're looking for."
Others say customers are genuinely interested in being green, but only if the economics are there. "Customers need a sustainable but also an economically viable option," says Hannum. "And so, the economics of it are still the primary consideration. Does it offer performance for the cost that I need?"
Supply chain planning (SCP) leaders working on transformation efforts are focused on two major high-impact technology trends, including composite AI and supply chain data governance, according to a study from Gartner, Inc.
"SCP leaders are in the process of developing transformation roadmaps that will prioritize delivering on advanced decision intelligence and automated decision making," Eva Dawkins, Director Analyst in Gartner’s Supply Chain practice, said in a release. "Composite AI, which is the combined application of different AI techniques to improve learning efficiency, will drive the optimization and automation of many planning activities at scale, while supply chain data governance is the foundational key for digital transformation.”
Their pursuit of those roadmaps is often complicated by frequent disruptions and the rapid pace of technological innovation. But Gartner says those leaders can accelerate the realized value of technology investments by facilitating a shift from IT-led to business-led digital leadership, with SCP leaders taking ownership of multidisciplinary teams to advance business operations, channels and products.
“A sound data governance strategy supports advanced technologies, such as composite AI, while also facilitating collaboration throughout the supply chain technology ecosystem,” said Dawkins. “Without attention to data governance, SCP leaders will likely struggle to achieve their expected ROI on key technology investments.”
The U.S. manufacturing sector has become an engine of new job creation over the past four years, thanks to a combination of federal incentives and mega-trends like nearshoring and the clean energy boom, according to the industrial real estate firm Savills.
While those manufacturing announcements have softened slightly from their 2022 high point, they remain historically elevated. And the sector’s growth outlook remains strong, regardless of the results of the November U.S. presidential election, the company said in its September “Savills Manufacturing Report.”
From 2021 to 2024, over 995,000 new U.S. manufacturing jobs were announced, with two thirds in advanced sectors like electric vehicles (EVs) and batteries, semiconductors, clean energy, and biomanufacturing. After peaking at 350,000 news jobs in 2022, the growth pace has slowed, with 2024 expected to see just over half that number.
But the ingredients are in place to sustain the hot temperature of American manufacturing expansion in 2025 and beyond, the company said. According to Savills, that’s because the U.S. manufacturing revival is fueled by $910 billion in federal incentives—including the Inflation Reduction Act, CHIPS and Science Act, and Infrastructure Investment and Jobs Act—much of which has not yet been spent. Domestic production is also expected to be boosted by new tariffs, including a planned rise in semiconductor tariffs to 50% in 2025 and an increase in tariffs on Chinese EVs from 25% to 100%.
Certain geographical regions will see greater manufacturing growth than others, since just eight states account for 47% of new manufacturing jobs and over 6.3 billion square feet of industrial space, with 197 million more square feet under development. They are: Arizona, Georgia, Michigan, Ohio, North Carolina, South Carolina, Texas, and Tennessee.
Across the border, Mexico’s manufacturing sector has also seen “revolutionary” growth driven by nearshoring strategies targeting U.S. markets and offering lower-cost labor, with a workforce that is now even cheaper than in China. Over the past four years, that country has launched 27 new plants, each creating over 500 jobs. Unlike the U.S. focus on tech manufacturing, Mexico focuses on traditional sectors such as automative parts, appliances, and consumer goods.
Looking at the future, the U.S. manufacturing sector’s growth outlook remains strong, regardless of the results of November’s presidential election, Savills said. That’s because both candidates favor protectionist trade policies, and since significant change to federal incentives would require a single party to control both the legislative and executive branches. Rather than relying on changes in political leadership, future growth of U.S. manufacturing now hinges on finding affordable, reliable power amid increasing competition between manufacturing sites and data centers, Savills said.
The British logistics robot vendor Dexory this week said it has raised $80 million in venture funding to support an expansion of its artificial intelligence (AI) powered features, grow its global team, and accelerate the deployment of its autonomous robots.
A “significant focus” continues to be on expanding across the U.S. market, where Dexory is live with customers in seven states and last month opened a U.S. headquarters in Nashville. The Series B will also enhance development and production facilities at its UK headquarters, the firm said.
The “series B” funding round was led by DTCP, with participation from Latitude Ventures, Wave-X and Bootstrap Europe, along with existing investors Atomico, Lakestar, Capnamic, and several angels from the logistics industry. With the close of the round, Dexory has now raised $120 million over the past three years.
Dexory says its product, DexoryView, provides real-time visibility across warehouses of any size through its autonomous mobile robots and AI. The rolling bots use sensor and image data and continuous data collection to perform rapid warehouse scans and create digital twins of warehouse spaces, allowing for optimized performance and future scenario simulations.
Originally announced in September, the move will allow Deutsche Bahn to “fully focus on restructuring the rail infrastructure in Germany and providing climate-friendly passenger and freight transport operations in Germany and Europe,” Werner Gatzer, Chairman of the DB Supervisory Board, said in a release.
For its purchase price, DSV gains an organization with around 72,700 employees at over 1,850 locations. The new owner says it plans to investment around one billion euros in coming years to promote additional growth in German operations. Together, DSV and Schenker will have a combined workforce of approximately 147,000 employees in more than 90 countries, earning pro forma revenue of approximately $43.3 billion (based on 2023 numbers), DSV said.
After removing that unit, Deutsche Bahn retains its core business called the “Systemverbund Bahn,” which includes passenger transport activities in Germany, rail freight activities, operational service units, and railroad infrastructure companies. The DB Group, headquartered in Berlin, employs around 340,000 people.
“We have set clear goals to structurally modernize Deutsche Bahn in the areas of infrastructure, operations and profitability and focus on the core business. The proceeds from the sale will significantly reduce DB’s debt and thus make an important contribution to the financial stability of the DB Group. At the same time, DB Schenker will gain a strong strategic owner in DSV,” Deutsche Bahn CEO Richard Lutz said in a release.
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.