FEBRUARY 2022
FEBRUARY 2023
with a a lot more money, it's a different time in the industry."
Now, he noted, is not the time for burying your head in the sand. However, while researching ostriches, he discovered they have some notable traits such as being the largest bird, extremely fast, and with a powerful kick, hence his thought-provoking presentation title, Be an Ostrich, but Don't Bury Your Head in the Sand.
As publisher of Pallet Enterprise, Pallet Profile Weekly, and Recycle Record, Brindley brings a wealth of knowledge each year to the WPA Annual Meeting, and this year was no exception. Discussing consolidation, he predicted that M&A activity would slow significantly in early 2023, but Kamps's notable acquisition of John Rock came shortly after.
Previously, Kamps had been focusing on recycler acquisitions, so acquiring a major new pallet operation such as John Rock seemed to mark somewhat of a shift for Kamps. In talking to Bernie Kamps, the CEO of Kamps, however, Bernie stressed that while it was a different move, it did not mark a change in strategy. "We are just building on our strategy to be a full-service company with broad capabilities to all of our customers," he said. "Some customers require tight specifications that recycled pallets cannot meet."
"We've got different players involved with a lot more money, it's a different time in the industry."
Brindley noted that it is rare that an operation like Rock becomes available, so it is important to strike while the iron is hot. The acquisition also provided vertical integration for Kamps and sawmilling capacity, which can be extremely important in gaining control over material supply. From the John Rock perspective, the sale ensured a succession plan for the company.
Brindley said he has heard reports of pallet sales down 10-20% nationwide. At the same time, dropping lumber prices have led to curtailments, while recycling has seen a resurgence of core supply. There is always a post-Christmas season pallet flush, but it has been larger than normal this year as retailers worked to sell off their "just-in-case" inventory levels built up since the pandemic.
Looking at market indicators such as freight, leading prognosticators predict a flat year, which does not auger well for pallet demand. Other indicators, such as consumer confidence, continue to be fragile.
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Regarding the potential for industry disruption, Brindley first looked at the escalating importance of warehouse automation as supply chains look to benefits such as reduced workforce, improved storage utilization, faster order assembly, and better accuracy.
As for disruption in the pallet industry, Brindley listed several areas of consideration:
RFID/Tracking of Pallets on a Large Scale "The technology is there," he said. "It's really just the willingness and the money to deploy it to get the data. And is the data worthy of that?
AI to Improve Customer Interaction and Sales "The other big one… that I think is super huge, is AI to drive customer interactions and sales… But there are now chat bots, and all sorts of software that you can use to search engines, and all sorts of things that are becoming available…where AI can have a huge impact on looking at your ERP system, pulling data out of that, helping you how to be able to deal with things from your own data…"
Other potential disruptors to consider, Brindley noted, include:
Establishment of National Quality Control Standards
Use of Vision Systems to Police Recycled Standards
Automation that Can Fully Repair a Pallet•New Pallet Design or Composite Material
True Environmental Scoring for Every Pallet
Interconnected ERPs and Order Tracking
Automated Lumber Feeding into Nailers That Works in All Weather Environments
Lightening Fast Nailer Changeovers
Brindley also discussed the launch of PalletTrader, a new online marketplace for pallets that seeks to revolutionize the industry for both buyers and sellers, as well as recent California legislation that outlines recycler rights. You can read a copy of the legislation by following this link:https://openstates.org/ca/bills/20212022/AB1760/.
Steve Mazza did a great job of organizing this year's slate of speakers, which provided great value for attendees.