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.
In the pallet world, wood has always been king, traditionally claiming about a 95-percent share of the overall market. And for good reason; there's a lot about the material to love. "It is cheap, strong, and safe," says Laszlo Horvath, director for the Center for Packaging and Unit Load Design at Virginia Tech.
But wood does have its disadvantages. For starters, there's the risk of splinters and protruding nails. And because wood pallets can harbor insects, pathogens, and mold, there's the issue of sanitation. Drawbacks like these have driven interest in "alternative" pallets made from materials such as plastic, paper, and metal. "For pretty much every disadvantage that wood has, there is a pallet out there that helps users [avoid] that problem," says Horvath.
So what's the best type of pallet to use? As is often the case, there's no one-size-fits-all answer—the choice will vary with the application. What follows is a look at the strengths and weaknesses of each type of material and the applications to which it is best suited.
PLASTIC: CLEAN BUT COSTLY
Next to wood, plastic is the most common material used for making pallets. Studies show that plastic accounts for 11 percent of the market demand, with 37 percent of pallet users employing at least some plastic units, according to Horvath. And interest in plastic is on the rise: In a 2013 report, the market research firm The Freedonia Group projected that demand for plastic pallets would grow at a double-digit pace through 2017.
Plastic pallets offer many advantages: They're impervious to pests and mold, they're free of splinters and nails, and they're easy to clean. Plus, they're lightweight. While wood pallets range in weight from 30 to 70 pounds, Horvath says, a plastic pallet can weigh as little as 10.
For these and other reasons, plastic pallets appeal to users across a broad range of industries, according to Curt Most of Orbis Corp., which manufactures plastic pallets. For example, food and pharmaceutical companies value them for their hygienic qualities, while many retailers prefer them for aesthetic reasons, particularly if they use pallets for store-floor displays. Companies that deal in high-end electronic goods often choose plastic because the pallets don't have any nails or protruding edges that can damage a product or its packaging, according to Most.
Plastic also has its downsides. Primary among them is cost. Plastic is typically more expensive than wood, especially if a company needs customized pallets (something other than the standard 48- by 40-inch footprint) that require unique molding and tooling, says Doug Gaier, director of regional sales for the pallet company Millwood. That makes them less than ideal for one-way shipments or applications where the pallet might get lost. In recent years, plastic pallet companies have responded to this concern by adding tracking devices and developing systems to help users keep tabs on their pallets. But the cost and the risk of "leakage" remain a deterrent for many companies.
Furthermore, although plastic is durable, it is not very "stiff," meaning the components of a plastic pallet will bend more than their wood counterparts will, says Horvath. This bending is sometimes known as "creep." And it's a bigger problem than it might seem, according to Horvath. "A lot of people say, 'Why do you care about the bending of the components if the pallet doesn't break?'" he says. The issue, he explains, is that if the components bend too much, it can result in the uneven distribution of stress on the top of the pallet. That, in turn, can compromise the integrity of the product—for example, causing bottles to leak or unit loads to become unstable.
A newer type of plastic pallet made from thermoset resins, as opposed to thermoplastic resins, may offer an answer to this problem. According to Fit Pallets, a maker of thermoset composite pallets, thermoset resins undergo a chemical change when they're molded, which strengthens the material and makes it less likely to bend or creep.
On top of that, thermoset pallets pose less of a fire risk than conventional thermoplastic pallets. Traditional thermoplastic pallets burn hotter and faster than wood ones and as a result, require a higher-capacity sprinkler system or a fire retardant. Thermoset plastic pallets, however, meet the UL 2335 classification for flammability (meaning they perform as well as or better than wood, and therefore don't require the costlier sprinklers) without the addition of fire retardants.
PAPER: LIGHT BUT SHORT-LIVED
In recent years, another type of pallet—the corrugated paper pallet—has started making inroads in the market, according to Horvath. The Swedish furniture retailer Ikea, for example, made a big splash in 2011 when it announced it was switching from wood pallets to paper. The Freedonia Group estimates that corrugated pallets represent 11 percent of all market demand.
The main selling point of corrugated pallets is their low weight (roughly 8 to 12 pounds), which makes them easy to handle and reduces shipping costs. Ikea's pallets, for example, are 90 percent lighter than their wooden predecessors. This makes them a good choice for airfreight shipments and containerized loads, says Horvath.
The pallets are also 100 percent recyclable and, unlike wood, do not require any sort of heat treatment to prevent pest infestation. As a result, they're well suited to export use.
Corrugated pallets, however, have a short lifespan, which means users shouldn't look to get multiple trips from them. They also cannot handle heavy loads. Nor do they stand up to moisture.
METAL: HEAVY GOING
Metal pallets are typically made from steel, aluminum, or some combination of the two. The market for metal pallets is still relatively small. According to Horvath, the material only represents 0.8 percent of the market demand and is being utilized by 7 percent of users. The Freedonia Group, however, expects that demand for metal pallets will grow at a faster rate than demand for pallets of any other material into 2017.
Both steel and aluminum pallets are strong, durable, and extremely easy to clean. Steel pallets, however, tend to be extremely heavy, often weighing over 50 pounds, according to Gaier. As a result, their use is largely restricted to specialized heavy-duty applications, says Horvath. For instance, the military uses steel pallets for shipping machinery and munitions.
Aluminum is lighter than steel, weighing on average less than 40 pounds for a standard 40- by 48-inch pallet, and offers a high strength-to-weight ratio, according to Peter Johnson, president of Eco Pact, a manufacturer of aluminum pallets. "Aluminum is also clean and sterile, and doesn't rust," he says. "Additionally, bacteria won't grow on it."
These qualities make the pallets well suited for industries such as pharmaceuticals, food, and industrial machinery, Johnson says.
Aluminum pallets can either be welded together or riveted, according to Johnson. Welded pallets are generally stronger but cannot be easily repaired. Eco Pact, however, makes riveted pallets with an interlocking design that improves the strength, according to the manufacturer.
While aluminum still commands only a small share of the market, Johnson says it's made headway over the last two years because of the material's cleanliness, safety (lack of nails, splinters, and protruding boards), and long lifespan. He expects demand for aluminum pallets to grow by 10 to 15 percent over the next five years.
A BIGGER PIECE OF THE PIE?
It seems unlikely that plastic, paper, or metal could topple wood from its perch at the top of the pallet market—a seat it has held for more than 70 years. "Even when you combine all of these other alternative pallet materials, you're still only talking about less than 5 percent of the pallet market," says Millwood's Gaier. "Wood is still the most sustainable, best dollar-value material for a pallet."
Yet by any measure, the pallet market is huge and growing. The Freedonia Group expects North American sales to hit 1.3 billion units by 2017, with a total value of $16.9 billion. And a bigger market means more room for lots of different types of pallets. As makers of alternative pallets proliferate and innovate, it seems likely they'll be able to carve out a profitable niche for themselves. And companies that have not looked at their pallet choices recently may find it advantageous to re-examine their options.
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.
National nonprofit Wreaths Across America (WAA) kicked off its 2024 season this week with a call for volunteers. The group, which honors U.S. military veterans through a range of civic outreach programs, is seeking trucking companies and professional drivers to help deliver wreaths to cemeteries across the country for its annual wreath-laying ceremony, December 14.
“Wreaths Across America relies on the transportation industry to move the mission. The Honor Fleet, composed of dedicated carriers, professional drivers, and other transportation partners, guarantees the delivery of millions of sponsored veterans’ wreaths to their destination each year,” Courtney George, WAA’s director of trucking and industry relations, said in a statement Tuesday. “Transportation partners benefit from driver retention and recruitment, employee engagement, positive brand exposure, and the opportunity to give back to their community’s veterans and military families.”
WAA delivers wreaths to more than 4,500 locations nationwide, and as of this week had added more than 20 loads to be delivered this season. The wreaths are donated by sponsors from across the country, delivered by truckers, and laid at the graves of veterans by WAA volunteers.
Wreaths Across America
Transportation companies interested in joining the Honor Fleet can visit the WAA website to find an open lane or contact the WAA transportation team at trucking@wreathsacrossamerica.org for more information.
Krish Nathan is the Americas CEO for SDI Element Logic, a provider of turnkey automation solutions and sortation systems. Nathan joined SDI Industries in 2000 and honed his project management and engineering expertise in developing and delivering complex material handling solutions. In 2014, he was appointed CEO, and in 2022, he led the search for a strategic partner that could expand SDI’s capabilities. This culminated in the acquisition of SDI by Element Logic, with SDI becoming the Americas branch of the company.
A native of the U.K., Nathan received his bachelor’s degree in manufacturing engineering from Coventry University and has studied executive leadership at Cranfield University.
Q: How would you describe the current state of the supply chain industry?
A: We see the supply chain industry as very dynamic and exciting, both from a growth perspective and from an innovation perspective. The pandemic hangover is still impacting decisions to nearshore, and that has resulted in a spike in business for us in both the USA and Mexico. Adding new technology to our portfolio has been a significant contributor to our continued expansion.
Q: Distributors were making huge tech investments during the pandemic simply to keep up with soaring consumer demand. How have things changed since then?
A: The consumer demand for e-commerce certainly appears to have cooled since the pandemic high, but our clients continue to see steady growth. Growth, combined with low unemployment and high labor costs, continues to make automation a good investment for many companies.
Q: Robotics are still in high demand for material handling applications. What are some of the benefits of these systems?
A: As an organization, we are investing heavily in software that will allow Element Logic to offer solutions for robotic picking that are hardware-agnostic. We have had success deploying unit picking for order fulfillment solutions and unit placing of items onto tray-based sorters.
From a benefit point of view, we’ve seen the consistency of a given operation improve. For example, the placement accuracy of a product onto a tray is far higher from a robotic arm than from a person. In order fulfillment applications, two of the biggest benefits are reliability and hours of operation. The robots don't call in sick, and they are happy to work 22 hours a day!
Q: SDI Element Logic offers a wide range of automated solutions, including automated storage and sortation equipment. What criteria should distributors use to determine what type of system is right for them?
A: There are a significant number of factors to consider when thinking about automation. In my experience, automation pays for itself in three key ways: It saves space, it increases the efficiency of labor, and it improves accuracy. So evaluating which of these will be [most] beneficial and quantifying the associated savings will lead to a “right sized” investment in technology.
Another important factor to consider is product mix. With a small SKU (stock-keeping unit) base, often automation doesn’t make sense. And with a huge SKU base, there will be products that don’t lend themselves to automation.
With any significant investment, you need to partner with an organization that has deep experience with the technologies that are being considered and … in-depth knowledge of the process that is being automated.
Q: How can a goods-to-person system reduce the amount of labor needed to fill orders?
A: In most order picking operations, there is a considerable amount of walking between pick faces to find the SKUs associated with a given order or set of orders. Goods-to-person eliminates the walking and allows the operator to just pick. I have seen studies that [show] that 75% of the time [required] to assemble an order in a manual picking environment is walking or “non-picking” time. So eliminating walking will reduce the amount of labor needed.
The goods-to-person approach also fits perfectly with robotic picking, so even the actual picking aspect of order assembly can be automated in some instances. For these reasons, [automation offers] a significant opportunity to reduce the labor needed to fulfill a customer order.
Q: If you could pick one thing a company should do to improve its distribution center operations, what would it be?
A: Evaluate. Evaluate the opportunities for improving by considering automation. In my experience, the challenge most companies have is recognizing that automation is an alternative. The barrier to entry is far lower than most people think!