18 WESTERN PALLET
Modern Materials Handling’s Annual Pallet Report Webcast: Some Takeaways
Pallet implications of international trade and e-commerce are top trends to watch
Modern Materials Handling (MMH) Magazine recently hosted its Annual Pallet Report Webcast, (available on demand here) once again featuring Dr. Marshall (Mark) White, President of White and Company, and moderated by Josh Bond of MMH. The webcast was sponsored by ORBIS Corporation. Here are some takeaways from that event.
Does a lower prioritization on pallet price reflect that customers are more interested in pallet quality?
Price as a most important factor in pallet selection has dropped from 60% of respondents in 2016 to 59% in 2017, and down to 57% in 2018.
“The importance of purchase price in the pallet selection process has slowly waned in recent years and is now tied with strength (57%),” Bond wrote last month in MMH. “In an age of increased focus on supply chain performance, sustainability and resiliency, it is not surprising to see this theme repeated throughout the survey. Cost per use—and even pallet weight—are of less concern than reusability and durability.”
While most of us would like to see more pallet buyers take a broad approach to understand their total pallet cost impacts versus pallet price, as Bond intimates above, Dr. White suggests an alternative possibility.
“I think this is clearly showing a very tight pallet market,” he told Bond. “Demand is very high and supply is struggling to keep up, so when you are in a market like that, availability becomes very, very important. And actually, price becomes less important. You know me, I’m a performance-based fellow...But in the end, this is a reflection of a very tight pallet market. And quite frankly, users are struggling to find quality pallets to meet their needs.”
Pallet market is growing, and even faster for plastic--especially for export
Dr. White commented that wood pallet production has grown from 750 million pallets annually in 2011 to 849 million in 2016, a 13% increase. Over a similar period of time, plastic pallet production has grown by 25%. He sees a huge demand in using plastic pallets for exporting. “These are one-way pallets going into that export pallets,” he said. “I think that’s where most of the increase is coming from in the plastic pallet market.”
Is the block pallet trend ebbing?
In 2006, 6% of pallet production was block style, Dr. White noted. In 2016, 21% of production was a block style pallet. With retailers such as Costco demanding block pallets, and their availability through poolers such as CHEP and PECO, more
users have become familiar with block pallets. “People began to recognize that the block pallet is very functional. In many ways, it is much more functional and can reduce operating costs. He noted that the slide is consistent with manufacturing trends--75% stringer and 21 to 25% block.
“I think we are starting to see that growth in block manufacturing starting to ebb a bit, and it makes sense. Certainly, the rental companies are all on block pallets, and the pools are maturing. But the growth in the recent past from stringer to block pallet was significant.
pallet users have become familiar with block pallets. “People began to recognize that the block pallet is very functional. In many ways, it is much more functional and can reduce operating costs. He noted that the slide is consistent with manufacturing trends--75% stringer and 21 to 25% block.
“I think we are starting to see that growth in block manufacturing starting to ebb a bit, and it makes sense. Certainly, the rental companies are all on block pallets, and the pools are maturing. But the growth in the recent past from stringer to block pallet was significant.
More new wood pallets, fewer recycled being purchased
This year’s survey showed an increase in wood pallet purchasers buying new, with a significant drop in those purchasing used pallets, which speaks to the continuing degradation of pallet core quality.
“The availability of the core that becomes the basis for used repaired or remanufactured pallets in the marketplace has declined,” Dr. White said. “And as that declines, the quality of used pallets has also declined.” He cautioned, however, that the used pallet market very much pertains to the 48x40 pallet, which is only 35% of the pallet market. “This doesn’t really tell us what is going on with repairing the odd sizes…” He suggested that increased purchases of new pallets might help improve quality in the used pallet market.