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‘Headache’ Won’t Go Away
Markets in Transition Column
By Rick LeBlanc
Date Posted: 7/29/2002
With my home office hemmed in by a growing stack of boxes marked "bathroom" or "kitchen," my ever-industrious and clutter-hating wife suggested that I begin thinking about getting my Pallet Enterprise files ready for our impending move.
What she had in mind more specifically was for me to peel my eyes away from the Pallet Board long enough to sort through the files and vaporize as many of them as possible. "I brought you the blue recycling box just in case a few of them are obsolete," she offered in mock innocence. Nice try.
Bill Sardo, NWPCA president emeritus, once told me that he referred to his collection of old files, reaching back to his beginnings in the pallet industry after World War II, as ‘the Brain.’ By comparison, my mere 20-odd years worth of clippings and letters about pallet management, starting with the perils of distribution center pallet control, may be more appropriately referred to as something like "the Headache." Certainly my wife would agree, albeit for different reasons.
By the time I became involved in pallets in 1981, the industry was already at or near its peak in terms of total new pallet production. I missed the whole evolution of building pallets with hammer and nails to power nailing tools and automated nailing lines. Gene Shrier, former owner of NEPA Pallet, suggested recently that new pallet manufacturing had already peaked by 1981. Twenty years ago you rarely saw a partial truck-load of new pallets the way you often do today.
In scanning over my old correspondence, ‘Headache’ was the optimal word. Pallet control at the distribution center level used to be a feisty game two decades ago. There were letters back and forth to grocery suppliers with questions about pallet specifications, quality, and exchange policies and imbalances. There were accusations, refused invoices, and some not-so-veiled threats. One grocery supplier was enraged that we returned empty pallets that looked used – obviously before pallet recycling had taken off. You just don’t get that kind of passion anymore in grocery.
The earliest Pallet Enterprise clipping in my file is a 1984 interview with Bill Sardo about pallet pooling. I always marvel at some of the early predictions that were right on the money but were ignored at the time. In the interview, Bill discussed rental and cooperative pallet pools, and the pros and cons of each. "If a pool is to succeed," he said, "it must yield substantial and measurable dollar savings to all parties concerned. Such savings are only realized if every participant does his part in the pool."
Bill attributed the demise of the GPC (Grocery Pallet Council) program in the U.S. in large measure because participants sent back non-spec "junk" pallets or broken pallets. Turning to the GMA pallet, he observed that it was "really not a pallet pool, for there’s no policing, there’s no control agency, there’s no effective repair program and there’s no accounting system involved. It’s merely an honor system. If everyone was honest, the program would be successful and effective from the cost standpoint of all parties involved. But, there have been problems over the years, because the honor system does not work effectively without a control agency."
In the early 1990s, interest in pallet management and pallet problems, especially in the grocery sector, seemed to gather steam. A 1990 Pallet Enterprise article profiled "a company propelled by such an intense vision of its own future that perhaps no one in the (pallet) industry will remain untouched." The company was CHEP U.S.A., which entered the U.S. grocery market later that year. The same article also underscored "a clearly identified need for improvements in pallet management techniques and quality."
Some speakers at NWPCA meetings who discussed third-party management, their remarks reported in Pallet Enterprise, filled in the meat and potatoes of how the pallet industry could respond to the CHEP challenge. Doug Moore at Mid-South Lumber described his company’s profitable pallet retrieval and recovery services. Stewart Richardson, then with the Canadian Pallet Council, explained how the CPC worked, a cooperative program with the potential of solving pallet problems in the U.S. grocery industry. Other articles described how rental would impact the pallet industry in particular, although the issues of CHEP pallet ownership, return and recycler compensation were just a faintly smoldering spark. (Some might argue that it still is). Recyclers received their first letter from CHEP, detailing its policies about ownership and return of its distinctive blue pallets.
And so ‘the Headache’ files continued through the 1990s. Industries with big pallet migraines, such as roofing, looked at pooling models but shied away. Third-party pallet management slowly took shape, even as early entrants such as FNPR and NPLS came to the party and then left empty handed. PECO was launched with a low key strategy and remains that today. Meanwhile, CHEP’s global pallet pool exploded from 25 million units to over 160 million today.
‘The Headache’ files are still very active. The issue of lost CHEP pallets, the lack of a viable No. 2 pallet rental company, and the challenge for the common pallet pools to survive around the world all loom large.
But I knew something had to go in the blue box to appease my wife, so I dropped in an old Pallet Pallet prospectus. I didn’t tell her I had two copies.