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Round 1: Pallets v. Crates: Searching for Synergies in Two Different Industries
Crate design expert, Jeff Duck outlines the differences between manufacturing pallets and crates and what a company needs to know if it wants to do both.
By Jeff Duck
Date Posted: 2/1/2010
Recently I was surfing the web for images of “Unique Wood Containers” when I ran across an art Web site that had a painting titled “Wood Crates in an Urban World.” It wasn’t what I was looking for, but being art, I had to take a moment and try to see what the artist saw while painting it.
The artist wrote that the painting reflected how a renewable resource – wood in this case – came to find itself leaning against a brick building in the back alley of a large city. These materials had rotted away and naturally recycled themselves while everything else in the painting was constructed to last a lifetime. Looking at the painting, I felt I could understand the point that the artist was making as well but there was just one small but very noticeable detail that struck me. The painting titled “Wood Crates in an Urban World” showed nothing but a brick wall and broken pallets. There were no crates at all in the picture.
This mislabeled picture brings me back to a conversation that I had with Dr. Ed Brindley of Pallet Enterprise magazine. We were discussing wooden bins in Australia and New Zealand when a light bulb went on in my head. For over 20 years, one question that I’ve continually wrestled with is “What’s the difference between a pallet and a crate?”
Right about now you’re probably thinking “that’s a pretty silly question.” Or maybe you are picturing the two in your head and noting the obvious differences. While the definition of a wood pallet and a wood crate may be simple, the differences between them are not so easily defined. And that may be why the two industries seem so similar to the average person but few companies effectively produce both.
It All Depends on the Definitions
It can be easy to define something in isolation while it can be difficult to define it in contrast to something else. A wood pallet is a load bearing structure with top and bottom decks that allow access for a forklift. Pallets are often 48” x 40” in size. A wood crate is a six-sided container that provides partial or full protection from other objects and natural elements. I also have seen structures that can surely best be described as a “pallet” having two ends and two sides added to make a bin, but it still doesn’t meet even the most basic definition of a crate.
So what’s in between pallets and crates? If you started with a 48” x 40” pallet and added two sides, two ends and a top you would have a crate. But while the first dimension of a pallet is measured from front-to-aft, the first dimension of a crate is measured from left-to-right. So when you define in detail what you’ve just created, the simple order in which you write the dimensions can result in confusion. Is it a pallet or a crate?
This confusion is compounded by the fact that other parties may use various definitions for the same thing. In reality, what seems like one industry to many outsiders is actually two different industries.
Can’t We All Just Get Along?
Wood, nails and forklifts are what we have in common. But in some ways we’re almost as different as paper and plastic. If we weren’t so different, every crate maker would make pallets and every pallet maker would make crates. But this is not the case.
Pricing structures, profits, volume, customer base, engineering, raw material sizes, inventory diversity, manufacturing equipment, process flow… you name it. It’s all different between manufacturers of pallets and makers of shipping containers.
With so many differences, why would you want to cross over to the other side? The reason is that your most valuable resources are portable from one industry to the other. This includes your company image, your facility, your knowledge of the raw materials and the skills of your manufacturing staff. Although your in-office resources may need some rearranging and your sales staff may require some training, your shop employees are likely ready to go. Although there are things for them to learn, they should adjust pretty quickly.
One of These Things Is Not Like the Other
I never did say what the big difference is between pallets and crates, did I? Here it is – the assembly process.
We may be back to the “Well that’s kind of silly” area, but my point lies mostly in what are in-between pallets and transport containers or ‘crates’.
Standard pallets are typically manufactured in an assembly line process using automated assembly equipment made by companies such as Viking, GBN, Storti, Pallet Chief, Rayco, Trace Equipment and others. By contrast, the manufacturing of shipping crates is often done by hand because of their custom nature. It’s rare that more than 10 to 100 of the same shipping container is manufactured at one time. I can’t imagine there being more than 100,000 of any one specific shipping crate over its lifetime, but pallets are often manufactured by the thousands to standardized dimensions. There are millions, if not billions, of pallets that have been made with the exact same specifications – at least by size and purpose.
Fruit crates aren’t custom. They have simple and common characteristics. They are most often ordered in large lots and one size of container may be made over the lifetime of a company using the same fixtures, process and people. Unless you’re talking about a prize winning pumpkin; fruits, vegetables and nuts are items that you could apply the term ‘Unified Load’ to. That term doesn’t work with custom wood shipping containers.
If you’re in either the pallet or the transport container business and want to expand into the other, consider where you’re located. Look for prospects that need products that are sold in high quantities and very little variations. It will create the least change in your organization and allow you to leverage your current resources while taking one step toward competing against the wood conglomerates, such as Universal Forest Products.
With the economy the way it has been, it may not seem like the time to expand and pick up new types of clients. Whenever the economy is down, competitors drop away and when competitors go out, there is a vacuum. You and many others in the area may now be fighting to get your share of the business that is suddenly available. If you can think outside the box and expand your product base a little, you can pick up a little new business to cover your overhead. You are also looking at a bigger picture that’s full of new opportunities in 2010 and beyond.
Jeff Duck is the developer of Crate Pro (www.cratepro.com), a custom crate design and costing software. He is the founder of The Wooden Crates Organization. Started in 2002, WoodenCRATES.org is the largest Web-based community for the wood transport container industry.