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Grocers Prefer Plastic When They Shop for I Pallets, Survey Shows/

By Catherine E. Scheerer

T he U.S. pallet in dustry is inargu- ably a major con- sumer of hard wood lumber. In 1995, total hard wood lumber use by the pallet in- dustry was esti-

mated to be 4.5 billion board feet or about 37 percent of U.S. production. Any shifts in material preferences by pallet consumers, therefore, could significantly impact the pallet industry and the overall demand for low-grade hardwoods.

The interest of pallet users in substi- tute or alternative materials has been growing in recent years and stems from such issues as increased environmental

concerns, a desire to conserve landfill space, concerns over future hardwood availability, material handling costs, and worker safety issues.

The Northeastern Forest Experiment Station of the USDA Forest Service, in collaboration with the Center for Forest Products Marketing at Virginia Tech, ini- tiated a study in 1994 to assess the poten- tial of substitute materials primarily in the grocery distribution industry. The grocery industry was chosen for this in- vestigation because it is a major market for standardized solid wood pallets and also has been the target of pallet producer campaigns promoting pallets made from substitute materials. The study focused on the downstream shipment of goods - from the distribution center to the retail store - because initial investigation identified possible pallet material

changes in this market segment. Grocery distribution personnel in-

volved in pallet purchase decisions were surveyed using a questionnaire. The sur- vey was mailed to 444 grocery distribu- tion personnel, and 245 were returned for a response rate of 55 percent. Follow-up interviews were conducted with respon- dents who had or who were considering switching to pallets of an alternative ma- terial. The study focused on perceptions of plastic and traditional solid wood pal- lets because the use of other materials was very limited in the downstream seg- ment of grocery distribution. Plastic Pallets

Wood and plastic pallets vary widely in design, performance, and distribution. Plastic pallets include those made from so-called “plastic lumber” and also molded plastic pallets.

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* Gavorable 7

6

- Plastic

0

Unfavorable 1 Costhse Durability Handling Qual.,]

safety

Figure 1. Grocery distributor perceptions of plastic and solid wood pallets by selected factors.

The majority of plastic lumber pallets Molded plastic pallets primarily are are made from recycled plastic formed into lumber dimensions where the design imitates solid wood pallets. Plastic lum- ber pallets typically do not carry a pay load specification due to raw material variability.

produced from high-density polyethyl- ene (HDPE) and formed into a pallet by foamed injection molding, twin-sheet thermoforming, or blow molding. In foamed injection molding, pressure and gas (typically nitrogen) are used to pro-

duce a pallet with wall sections and a rib design. Twin-sheet thermoforming uses heat and a vacuum process to shape sheets of plastic on a mold. This process is typically less expensive than foamed injection molding because of lower tool- ing costs.

In the blow molding process, heated plastic is forced into the sides of a mold. This type ofpallet resembles a twin-sheet thermoform pallet except for its seamless sides. Also, a blow molded pallet may be produced faster than a twin-sheet thermoform pallet because the blow molding process uses plastic pellets, eliminating the step of forming a plastic sheet.

Plastic pallets designed for and used specifically by the downstream loop of the grocery distribution industry gener- ally have some common characteristics and distribution features. These “order- selecting” pallets operate in a closed loop system between a specific distribu- tion center and retail outlets. As an order- selecting pallet, they are less expensive to produce than their rackable counter- parts. The pallet is usually a 48-by-40

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’- platform that allows pallet jacks four- way entry. These pallets typically are distributed to customers with a service life guarantee and recycling program. When the pallets reach the end of their usable life, the manufacturer offers the customer credit for the resin from the used pallet. The credit may be used to- ward the purchase of new pallets. This arrangement solves the user’s problem of disposing of pallets. Common Wooden Types

Some of the most commonly used wood pallets used in grocery distribution include those from Chep (Common- wealth Handling Equipment Pooling), SPEQTM (Specified Pallets, Engineered for Quality), and traditional solid wood pallets, both new and used.

The two pallet designs offered by Chep are the Mark I11 and Mark 55. Both designs are constructed of softwood lum- ber with hardwood lead deckboards dis- playing the company name and logo on blue painted sides. Each design has a safe load capacity of 2,800 pounds with the ability to perform in a rack storage sys-

The study revealed that Chep pallets received the highest average overall pallet performance score when ship- ping dry goods downstream and outperformed both plastic and wood. This Chep performance score is based on a limited sample where nine respondents in- cluded Chep in the “other” please specih category - indicating that they differentiated Chep pallets from tra- ditional solid wood pallets used in grocery distribution.

flush, non-reversible, notched stringer pallet, with two-way entry for hand jacks; the Mark 55 is a 48-by-40 flush, non- reversible, perimeter base, nine-block pallet with four-way entry for both fork- lift and hand jacks.

Chep rents pallets to grocery manufac- turers, and the grocery distributor has “free use” of the pallets while they are under the original load. The distributor is responsible for the pallets while they are in his possession and also for collecting and returning them to a Chep depot. Chep maintains quality control by rou-

lets are returned. SPEQTM pallets are solid wood pallets

manufactured or repaired to conform to a uniform standard of the National Wooden Pallet and Container Associa- tion (NWPCA). New SPEQTM pallets are offered in two designs: SPEQ-M (mul- tiple use) and SPEQ- L (limited use). The multiple use pallets have a minimum av- erage life-to-first-repair of 10 trips, the limited use pallets have a minimum aver- age life-to-first-repair of one to nine trips. Quality is controlled by inspections of the SPEQTM pallet manufacturer or recy-

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. Although interest and adoption of Chep and SPEQTM pallets have been growing in the grocery distribution in- dustry, the dominant wood pallet type used in this segment of the industry is a used 48-by-40 stringer, nonreversible, GMA (Grocery Manufacturers of America) style pallet. There is limited use of new GMA type pallets in this industry segment, and they are typically produced in many different versions. Unlike Chep and SPEQTM pallets, the dimensions, specifications, and condition of used GMA pallets are highly variable. Some of these used pallets contain full or one-half companion stringers, uneven deckboard thicknesses, and metal plates to repair damaged stringers. These and other char- acteristics make the used GMA pallet highly variable. Pallet Selection Factors

A major component of the study in- volved identifying major factors in the pallet selection process. Factors impor- tant in pallet purchases were identified through interviews with grocery distribu- tors and a review of available pallet pro- mohnal literature. The following fac- tors were identified: recyclability, initial cost, durability, fire resistance, sanita- tion, ability to rack, environmental suit- ability, weight, weather resistance, dis- posal cost, quality, cost per use, em- ployee handling safety, and ability to nest (Le., fit inside one another). Grocery distriblltioc persnme! were asked to rite the relative importance of each factor when selecting a pallet type to ship goods downstream to their customers. Cost per use was the most important fac- tor, followed by durability. Employee handling safety and quality tied for third.

Cost per use generally was defined by respondents as the purchase price of the pallet divided by the number of round trips the pallet makes from the distribu- tion center to the retail store before repair is needed. Respondents noted that evalu- ating the cost per use is very important in determining the overall cost of a particu- lar pallet. This suggests a change from the traditional approach in which pallet selection was based predominantly on purchase price.

Durability, the second most important factor in pallet section, was described by respondents as the time to first repair. This factor was important to respondents because it is closely related to cost per

Solid wood

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1 2 3 4 5 6 7 Very poor

performance Mean Rating Excellent performance

Figure 2. Perceptions of the overall performance of plastic and solid wood pallet for downstream shipment of groceries.

use. Obviously, if a pallet lasts many trips before needing repair, the cost per trip is reduced.

Respondents described employee handling safety as the absence of pallet characteristics that may harm an em-

ployee. Potentially harmful pallet char- acteristics include splinters, protruding nails, and pallet weight. Employee han- dling safety was important to grocery dis- tributors because of possible government regulation that would increase the finan-

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cia1 liability to employers for injured employees. The prospect of increased government regulation is a factor prompting grocery distributors' interest in lighter pallets.

During interviews, several grocery dis- tribution managers defined quality as the ability of the pallet to meet dimension specifications consistently and to resist breakage. Pallet quality was considered a major factor in purchase decisions be- cause high quality pallets are thought to reduce overall pallet costs. For example, one respondent said poor quality pallets with inconsistent dimensions increase the likelihood of material handling equipment damaging the pallet. Distributors Rate Pallets

Grocery distributors were asked to rate

solid wood and plastic pallets on the top four selection criteria. In all four areas, they perceived plastic pallets to out-per- form wood pallets (Figure 1). It is not surprising, therefore, that plastic pallets were rated better than solid wood pallets in overall performance (Figure 2).

Many respondents perceived the cost per use of plastic pallets to be signifi- cantly less than that of solid wood pal- lets. For example, several respondents perceived the plastic pallet (relative ini- tial cost of $23 identified in follow-up interviews) would make 75 trips before needing repair, whereas a used solid wood pallet (relative initial cost of $4 as identified in interviews) would only make approximately five trips before needing to be repaired. This resulted in a

'I

perceived cost per use of the plastic p& let ($0.3 1 ) to be less than half the cost of the solid wood pallet ($0.80).

Accordingly, respondents perceived plastic pallets to be more durable than solid wood pallets. Various respondents said that the plastic pallet, when im-

or other objects, can bend and return to

wood pallets. Furthermore, numerous re- spondents said that plastic pallets are more durable because they do not have bottom deckboards that typically are damaged by materials handling equip- ment.

Many respondents also perceived plastic pallets to be much safer than solid wood pallets because they weigh less. Respondents reported that the average weight of the plastic pallets they had in use was 18 pounds, compared to solid wood pallets that weighed between 45 and 60 pounds. They believed the lighter plastic pallet reduces the risk of back, arm, and foot injuries to employees. Re- spondents noted that the lack of splinters from plastic pallets further reduces the risk of personal injury. Chep Scores High

Plastic pallets were perceived by re- spondents to be of higher quality than solid wood pallets because they have a longer life and consistently meet dimen- sional requirements. Consistent pallet dimensions were very important to many respondents because they helped to re- duce overall costs. Respondents re- ported many inconsistencies in the tradi- tional solid wood pallet such as thin or warped deckboards and stringer height that was variable from one pallet to the next. They noted that these inconsisten- cies jammed handling equipment and re- sulted in pallet and product damage and reduced worker efficiency. Many respon- dents believed that the quality of solid wood pallets is a problem because pallet quality specifications are not enforced. However, this problem could possibly be eliminated by adopting pallets with a quality assurance program such as Chep or SPEQTM.

The study revealed that Chep pallets received the highest average overall pal- let performance score - 6.3 on a scale of l to 7 - when shipping dry goods down- stream and outperformed both plastic (average performance score 5.4) and

patted by materials handling equipment

its original shape more so than solid

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38 PALLET ENTERPRISE

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wodd (average performance score 4.7). This Chep performance score is based on a limited sample where nine respondents included Chep in the “other” please specify category - indicating that they differentiated Chep pallets from tradi- tional solid wood pallets used in grocery distribution.

Perceptions do not necessarily reflect reality. However, perceptions - accurate or not - have a direct and real effect on purchasing decisions. The strong, favor- able perception of plastic pallets means plastic pallets may continue to be substi- tuted for solid wood pallets in distribu- tion systems where a closed loop can be achieved. These closed loop systems may be niches within major distribution systems, such as in the grocery distribu- tion industry.

Wood will continue to remain the sig- nificant material of choice for many pal- let customers, especially those who have “custom” pallet needs and those who use pallets in open distribution systems. Cus- tomers with “custom” or changing pallet needs will continue to demand wood be- cause wood pallets can be quickly de- signed and built to meet particular needs whereas plastic pallet designs are diffi- cult to change. The open system of the grocery distribution industry - the ship- ment of goods from the manufacturer to distributor - continues to be dominated by wood pallets. However, there is a trend t m m d adopting C h q z d ether xi=!= tiple-use pallet management systems.

This increased adoption of plastic pal- lets and multiple-use wood pallets could have a significant effect on the future demand for hardwood lumber by the U.S. pallet industry. Demand for Eastern hard- wood lumber by pallet manufacturers may decrease approximately 20 percent over the next 5 years due, in part, to the increase in plastic and multiple-use pal- lets.

(Editor’s Note: Catherine E. Scheerer is a Research Forest Products Technolo- gist with the USDA Forest Service, Northeastern Forest Experiment Station, Princeton, W. Va. References in this ar- ticle to any trade, firm, or corporation names do not constitute an endorsement or approval by the US. Department of Agriculture or the U S . Forest Service of any product or service to the exclusion of

0 others that may be suitable.)

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