Contribution of Wooden Pallets for the Logistics Industry: Economic, Technical and Ecological Considerations

Wooden pallets are a core part of the global logistics industry because they enable the safe handling, transportation and storage of goods. Wooden pallets are easy to construct, meaning their production is cost effective. After assembly, pallets manufacturers then deliver the same to various clients (Roy et al., 2016). Typically, pallet buyers include other manufacturers, warehouses, and bulk shippers. Evaluating some economic, technical and ecological aspects of wooden pallets use is important in understanding the prevailing pallet circulation practices, identifying liabilities and how to mitigate the latter (Poenicke, & Kirch, 2016). 

Economic Aspects

There are up to 2 billion pallets in circulation worldwide, with the U.S being a leading manufacturer and consumer of pallets (Alanya-Rosenbaum, Bergman, & Gething, 2018; Buehlmann, Bumgardner, & Fluharty, 2009). Wooden pallet manufacturing sustains the employment of thousands of people. Pallets find utility across industries, from the packaging of manufactured goods at factories to their freight on road, rail and seas (Gerber, 2018). For example, pallets play a vital role in the exportation of goods globally, sustaining thousands of employment opportunities. Other employment opportunities that pallets create are in the standardization and quality assurance auditing, with numerous professional bodies under the aegis of ISO (Frąś, Olsztyńska, & Scholz, 2018; Alanya-Rosenbaum, Bergman, & Gething, 2018; Raballand & Aldaz-Carroll, 2007).

Pallets offer several advantages, key among these being they make the handling of goods, particularly heavy loads, easier. In lieu of moving individual units of product, pallets enable the movement of products in bulk (Raballand & Aldaz-Carroll, 2007). This results in less time handling the distribution of products.  Pallets allow for the movement of goods in bulk, making them critical to reducing the space needed for the storage of goods (Raballand & Aldaz-Carroll, 2007). Pallets ensure that goods cannot only be moved in bulk, but also stored in bulk (Buehlmann, Bumgardner, & Fluharty, 2009). Pallets therefore reduce storage costs, in addition to ensuring easy stowage and retrieval of goods. 

Pallets enable the safe handling of goods. Typically, forklifts are used to handle the bulk goods on pallets, making it possible for those handling the goods to do so with minimal risk of injury (Buehlmann, Bumgardner, & Fluharty, 2009; Raballand & Aldaz-Carroll, 2007). Pallets also ensure that there is minimal damage to goods in the course of packaging, storage and transportation (Raballand & Aldaz-Carroll, 2007). With pallets, it is possible to maintain the quality of goods as they go through the logistical processes. 

The multiplicity of pallet standards continues to drive up business costs, particularly in less developed economies that rely on both American and European pallet standards for their imports and export transactions (Raballand & Aldaz-Carroll, 2007). The variation in the pallet worldwide is best illustrated by the differing pallet detentions in use. For example, in Europe, the 1200 x 800mm standard is in use. In America, the standard is 1219 x 1216 mm and in Asia, the 1100 x 1100mm pallets find wide use (Buehlmann, Bumgardner, & Fluharty, 2009; Ren et al., 2018). 

The value of the products under transportation contributes to the grade of wooden pallets used. For example, transporters moving heavy stone and steel products prefer using low quality wooden product platforms because of the likelihood of damage (Choi et al., 2019; Eyre et al., 2018). On the other hand, transporters use wooden pallets made of high quality lumber for lighter products with larger profit margins such as food and processed consumer goods. 

Technical Aspects

Wooden pallets come in varying sizes to take on different loads, something that international standardization organizations such as the European Pallet Association e.V. (EPAL), ISPM 15;2009, National Wooden Pallet and Container Association (NWPCA) and  Union Internatinale des Chemins (UIC) recognize (Alanya-Rosenbaum, Bergman, & Gething, 2018; Frąś, Olsztyńska, & Scholz, 2018). In the U.S. alone, there are over 400 different pallet standards designed to handle different product categories (Raballand & Aldaz-Carroll, 2007). 

Standardization continues to remain a challenge in the pallet manufacturing industry. The challenges that arise from wooden, plastic and metal pallets are a result of the different requirements of pallet consumers (Rothwell et al., 2016; Robey et al., 2018). To illustrate, attempts to standardize pallet sizes have so far not yielded a standard international measure (White & Hamner, 2005). For example, Australia found that favoring the adoption of international pallets in lieu of those presently in use would result in a significant increase of the goods in the short term, that is, over a period of 10 years (Raballand & Aldaz-Carroll, 2007). According to Frąś, Olsztyńska, & Scholz (2018), standardization criteria includes international exchangeability, universal adaptability, cost transparency, licensure accessibility, consistent quality standards internationally, environmental considerations and independent auditing (p. 29).  The size of pallets varies considerably and is usually a function of what the use their consumers intend them for, with some pallets designed to pass through doorways and others to handle large items such as wind propellers. 

Because pallet consumers primarily use the same for logistics purposes, they look at a variety of factors when procuring wooden pallets. First, pallet consumers consider what they are willing to pay for and the longevity of the pallets they purchase. Typically, the procurement of wooden pallets is contingent two variables, that they are competitively priced and their use more than returns what the consumers invested in them. On average, the lifespan of most pallets is between 7 and 8 years (Eyre et al., 2018). Pallet consumers also have to evaluate the load that the pallets they wish to purchase can carry without being distorted. Pallets come with various stiffness indices, meaning that consumers have to evaluate the loads they intend to subject the pallets to before procuring the same. 

Pallet consumers also have to consider whether the pallets they are purchasing are compatible with the equipment available for handling the same. Compatibility with equipment is important, with the packaging of goods pallet consumers produce determining the kind of equipment they need to handle goods in bulk as well as the pallets that complement the equipment available. Another important factor in the procurement of pallets is their longevity. Ordinarily, the design of pallets allows for rough handling, and in this wooden pallets have a definite advantage over steel and plastic variants because the former are easy to either repair or replace (Abdallah, 2017).

In addition to manufacturing, pallets also recycled on a large scale (Desai, 2018). The remanufacture of pallets is a major industry and entails the repair of pallets worn down through use. Some estimates suggest 7 out of 10 wooden pallets in use presently are refurbished, a trend that the scarcity of lumber underpins (Jadin et al., 2017; Moreno & Saron, 2017; Rigg-Aguilar et al., 2019). Additionally, refurbished wooden pallets whose condition is excellent have a lower price tag compared to new pallets, making them popular among small and medium scale pallet consumers (White, 2017). 

The manufacture of new pallets continues unabated, with the automation of warehousing and shipping operations driving the demand for new pallets (Park, Horvath & Bush, 2016). The increasing precision in cargo handing that characterizes automated cargo handling requires that pallets meet strict dimension criteria (Abdallah, 2017; Alvarez & Rubio, 2015). For the reason that pallet use overtime results in distortions that result from shrinkage, warping, and may become loose, factors that may interfere with automated handing processes (Gomez, 2011). Defective pallets may hold up automated handing sequences, resulting in downtimes that can result in considerable losses. Therefore, pallet consumers whose processes are automated and that require large pallet inventories find it cost effective to procure new pallets as opposed to using remanufactured ones (Bush, Reddy & Araman, 1997). 

Regulatory considerations also determine the pallets that consumers purchase. Consumers such as the healthcare, fresh produce, and pharmaceutical industries typically purchase new pallets in compliance with strict phytosanitary regulations that require certificates of origin to eliminate biohazard concerns such as contamination (Allen, Noseworthy, & Ormsby, 2017; Frąś, Olsztyńska, & Scholz, 2018). The International Standards for Phytosanitary Measure 15 (ISPM 15) is the dominant regulatory standard that ensures pests such as the pinewood nematode, bark beetles and wood borers do not cross international points of entry and exit (Allen, Noseworthy, & Ormsby, 2017; Epanchin-Niell, 2017; Eyre et al., 2018).

Remanufactured wooden pallets remain popular among consumers, particularly those that produce non-standard goods that require the consumer to customize pallet sizes to meet prevailing freight requirements (Choi et al., 2019; Gomez, 2011). Manufactures of glass, chemicals and artwork dealers are examples of leading consumers of remanufactured or customized pallets (Trebilock, 2017). Still, pallet remanufacturers and lessors remain at the core of refurbished wooden pallets, with some companies offering pallets as a service through the use of sophisticated technology-based management solutions (Park, Horvath & Bush, 2018; Eigenhuis, 2017; Ren et al., 2018). 

Wood pallets retain definitive advantages over their plastic, metal or corrugated counterparts (Lacefield, 2008; GRoberts & Miller, 1993; Chen, 2017). Accounting for the impact from handling, varying temperature conditions, remanufacture and so forth, wooden pallets are demonstrably superior to their counterparts (Quesada, Gazo & Sanchez, 2012). Single use wooden product materials, of which wooden pallets are the most widely used, are popular in the event that the product under transportation such as stone and steel is weighty and likely to damage the wooden logistics platform in use (Eyre et al., 2018). 

Ecological Aspects

Wood is not only an environmentally friendly material, it is if well managed a sustainable resource and importantly, is easy to recycle (Buehlmann, Bumgardner, & Fluharty, 2009). Wooden pallets, unlike their plastic and steel alternatives, remain popular because they are easily reusable. There are many uses that the pallets exiting the logistics industry are put to, with the uses for pallets extending beyond their remanufacture lifecycles (Quesada, Gazo & Sanchez, 2012).  Other uses wooden pallets that exit circulation are put to include chipping them for use as animal bedding, for the manufacture of biofuels and in agriculture for mulch (Lesar et al., 2016; Allen, Noseworthy, & Ormsby, 2017). In developing economies, wooden pallets can be a source of fuel for heating in tea processing industries and for institutional use, particularly schools and tertiary institutions that still depend on firewood stoves (Hossain, Leu, & Poon, 2016). 

Worldwide, there is an increasing awareness of the environmental impact of the process paradigms that go into the manufacture, storage and distribution of goods, as well as the impact of the services that go into managing consumer products (de Oliveira et al., 2016). The U.S. department of agriculture (USDA) regards pallets as a critical part of sustainable bio-economics because they are not only biodegradable, but can also be reused for a variety of purposes (Luppold, & Bumgardner, 2016). Through the through the Pallet Design System (PDS), the USDA has over the decades enabled wooden pallet manufacture innovations to ensure longevity over the pallets useful lifecycles (Allen, Noseworthy, & Ormsby, 2017; García-Durañona et al., 2016). 

Because a major proportion of pallets in circulation are made of wood, sustainable production of pallets has become a major conservation issue (Frąś, Olsztyńska, & Scholz, 2018). The emphasis in the manufacture of packaging and logistics today deemphasizes one-off solutions, or single-use expendable pallet systems in favor of recyclable options (Roy et al., 2016). According to international lifecycle assessment (LCA) tools, the use of wood products result in less greenhouse gas (GHS) emissions, in addition to being less energy intensive (Park, Horvath & Bush, 2018; Alanya-Rosenbaum, Bergman, & Gething, 2018; Sgobbo, 2016; Tsang et al., 2007). Collaboration between environmental agencies, both administrative and non-governmental, and stakeholders in the logistic chain such as manufacturers, distributors and lumber-dependent industries such as construction can significantly reduce the amount of wooden pallets that end up in landfills (Buehlmann, Bumgardner, & Fluharty, 2009). 

Despite the recycling efforts, a large quantity of pallets end up in landfills. For instance, pallets constitute 2 to 3 percent of landfill in the U.S. (Buehlmann, Bumgardner, & Fluharty, 2009). The differing pallet sizes in use internationally have the disadvantage of straining the already scare timer resources that go into pallet manufacture, a situation that international standardization can preempt (Rigg-Auguilar, 2019; Buehlmann, Bumgardner, & Fluharty, 2009). Wooden pallets have the disadvantage of being able to harbor invasive species, though there are concerted on going regulatory efforts to mitigate the proliferation of invasive species such as the ISPM 15 (Eyre et al., 2018). 

In conclusion, wooden pallets are central to local, regional and international logistic undertakings because of their inherent economic, technical and ecological advantages. In addition to being easy to manufacture, wooden pallets are also scalable as well as being an environmentally sustainable logistics component. Still, wooden pallets place considerable pressure on available forest stocks, as well as increasing the possibility the transference of invasive species. Further, existing recycling and reuse efforts do not appear to be able to absorb wooden products that have completed their useful life cycle. Although wooden pallets per se are a sustainable logistic solution, their recycling and standardization can be improved further with beneficial ecological outcomes.

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