Pallet brokers. Pallet
distributors. Pallet wholesalers. Companies quietly working the middle ground to connect
pallet users to pallet suppliers may not agree totally on the best word to describe the
services they provide, but the importance of these businesses to the pallet industry
nevertheless is being more widely recognized.
They have the capability to offer local, regional, and — in some
cases — national pallet customers a single source solution for the complete range of
their pallet and crate requirements.
For pallet manufacturers, this sector provides a highly professional
sales force with no fixed costs that is paid only for the business it brings, and it
generates business from a broader market area.
Dictionary definitions are inconclusive. Funk & Wagnalls describes
a broker as one who buys and sells for another on commission or who arranges for the
negotiation of contracts. While pallet "brokers" arrange the buying and selling
of pallets, they normally purchase them for resale to specific accounts rather than just
take a commission; by this definition, then, they could not be purely called brokers. A
wholesaler, on the other hand, is deemed to be one who sells goods in large bulk or
quantity, especially for resale. This description, however, fails to capture the essence
of matching up pallet mill capability with pallet user demand, which is a core ingredient
of the pallet industry middle-man function. The definition of distributor has a similar
failing: one who distributes or sells merchandise, usually of a specific type or category.
"The names are very much a nuance," said Lee Sherman,
president of Timber Industries, a pallet wholesaler based in Towson, Md. with offices in
Peachtree City, Ga. and Saratoga Springs, N.Y. Established in 1977, Timber Industries is
the successor to the Quincy L. Morrow Company, a manufacturer of wood pallets since 1933.
"They are interchangeable between broker and wholesaler," he
said. "There is no difference. For some reason, the pallet industry tends to call the
wholesalers ‘brokers’ where the lumber industry uses the term
‘wholesaler.’ But they are very much interchangeable, at least in my
context."
"There’s no difference from what I’ve seen, and
I’ve been in it for 26 years," agreed Joe Smith, president of H&S Forest
Products, a broker based in Columbus, Oh., with a branch office in Collierville, Tenn. Now
with over $20 million in sales annually, H&S has been in business since 1990.
Part of the difficulty in "branding" the service these type
of companies provide is that some pallet mills have been treated poorly by the middle-man.
"A few mills got burnt, and maybe they weren’t dealing with reputable
wholesalers," said Joe. "They’ve been stung. They don’t like the
terminology ‘wholesaler,’ so maybe the term ‘broker’ is better."
Other middle-men say that they also like the term broker as well, but
there is no clear consensus. Some prefer to be called wholesalers.
Adian Industrial Sales is one of the longest serving brokers in the
industry, dating back to the company’s inception over 36 years ago. "I guess
broker is what we consider ourselves," said Worden Teasdale, president of the
Toronto-based company. "We’re the middle-man between the manufacturer and our
customer. We broker a deal. Our company has been a broker since it first started in
1962."
Most of Adian’s customers are in Ontario and the "border
states" although it has single customers as far away as Ohio and Virginia.
"The broker is a term that is more comfortable for the
end-users," said Tom Losinski, president of Mid-Central Pallet & Supply in
Wavzata, Minn., a pallet broker for the last 15 years and a pallet salesman for six years
prior to that. "They seem to identify with that term rather than the
‘non-stocking’ distributor, which is what I consider myself to be."
While Tom believes that some brokers have tarnished their image over
the years, he is not sure whether the poor image relates to brokers specifically in the
pallet industry or to brokers in general. However, he believes the image of broker is now
changing in a positive way.
"Most suppliers that I come in contact with in our trading area do
either new or used or crating, but they don’t do the whole range," Tom said.
"I think that it has been the demand from the end-user that has determined what we do
for them. It’s the number of vendors they are dealing with, and the one-stop
shopping, that sort of thing."
Like other brokers or distributors, Tom believes they offer advantages
in terms of a wide product mix and broad geographic capability — benefits that
increasingly are attractive to pallet users. By working with several pallet plants, a
broker can meet the needs of customers that have multiple locations as well as those of
customers with a range of pallet and crating requirements. This is especially attractive
to some pallet users who want to reduce their list of vendors.
"In some cases the customer requires more than a bare bones
pallet," Worden pointed out. "He may have a number of different packaging items
he requires and we can assist him with. He may need pallets and boxes — maybe plastic
pallets or plywood, softwood, hardwood or whatever." Adian Industrial has one
customer that it supplies with various items from three different pallet companies, he
said.
Brokers can effectively match up different locations of a pallet user
with appropriate local pallet plants. "An account may have a plant in Columbus and
another one in Memphis," said Joe. "A customer can use us to both locations or 5
locations or 10 locations."
Successful brokers like to establish an ongoing relationship between a
pallet mill and a pallet user location so that the pallet plant can become familiar with
the customer’s pallet needs.
Customers may also benefit from the professional approach to sales that
large brokers can provide. Adian, like others, provides customers with computer-assisted
pallet design, typically PDS (Pallet Design System), as well as a depth of materials
handling, pallet, and customer service experience.
"We supply PDS, we supply repair services, and used pallets,"
Worden said. "They can get it all through dealing with us."
"From a customer standpoint, we offer, I believe, great peace of
mind," Lee said. "We are there for them (if any problems arise). If one of our
mills burns down, for example, we replace it. We will fit into that equation."
Pallet brokers are most popular with pallet plants without a dedicated
sales force or with a limited sales staff. "The advantages for manufacturers dealing
with a broker varies very much from manufacturer to manufacturer," Lee said.
"Some manufacturers do not have a sales force, so you tend to concentrate through
brokers." If a pallet company does have a direct sales force, the broker endeavors
not to compete with a direct account. "We’re not in the business to muddy the
water. We are in the business of giving our pallet mills business, not taking it
away."
A broker can give a local pallet company some of the advantages of a
national company by providing it with accounts farther afield as well as matching it up
with local branches of multi-location pallet users. "I think the main thing we bring
to the table is being able to secure customers that are probably out of their normal
shipping area," said Joe. "And we do everything. We send them a print of the
pallet to be built. We use a CAD (computer-assisted design) system, so there is no
question about how many boards, how many nails, how many stringers, and the size of the
stringers, and (as a result) there is no problem."
One of the key benefits for pallet mills, the brokers emphasized, is
timely payment according to negotiated terms. "We pay real quick, so they have no
receivables as such, other than about five days," said Lee. "We have the
responsibility of collections. So if one of our customers files a Chapter 11, that’s
our responsibility. Unfortunately, it does happen to us. Our thought process is that they
are our customers, so if there is a risk, the risk has to be ours." Prompt payment
also allows pallet plants to effectively plan their lumber purchases from sawmills.
As for which broker a pallet operation should select, Tom cautioned
that pallet producers should make themselves aware of a broker’s background and track
record. He suggested learning about the broker, his areas of expertise, and his depth of
knowledge — not only in pallets but also in the sawmill industry and material
handling. "You have to bring a broad base of education and experience to the
table," he said.
Another thing a pallet mill should ask, according to Joe, is if a
broker can sell all types of pallets so that the plant can fully utilize its lumber.
"There are going to be some mills that do GMA, but that’s okay if you’ve
got the lumber to do that," he said. "But there are a lot of mills that are
getting cants from 8 feet to 14 feet. And you need 36 squares and 42 squares and 48-by-40
and 48 squares to utilize all their lumber. That’s what we try to do. It goes back to
the old way, but that’s the way we like to sell — to help out the mill."
Brokers like Lee emphasize that their success is linked to establishing
long-term relationships between themselves, pallet suppliers and pallet customers. Others
agree. "We’ve been doing business with some mills for over 20 years," Joe
pointed out. "There is a trust and a loyalty factor that I don’t think you can
put a price on, really."
In a business environment that displays an increasing trend toward "single
stop" pallet procurement at the corporate level and the need for broader geographic
coverage, such as that offered by national companies, pallet brokers believe they provide
locally-owned pallet companies a way to keep pace in a changing market.
Pallet brokers. Pallet
distributors. Pallet wholesalers. Companies quietly working the middle ground to connect
pallet users to pallet suppliers may not agree totally on the best word to describe the
services they provide, but the importance of these businesses to the pallet industry
nevertheless is being more widely recognized.
They have the capability to offer local, regional, and — in some
cases — national pallet customers a single source solution for the complete range of
their pallet and crate requirements.
For pallet manufacturers, this sector provides a highly professional
sales force with no fixed costs that is paid only for the business it brings, and it
generates business from a broader market area.
Dictionary definitions are inconclusive. Funk & Wagnalls describes
a broker as one who buys and sells for another on commission or who arranges for the
negotiation of contracts. While pallet "brokers" arrange the buying and selling
of pallets, they normally purchase them for resale to specific accounts rather than just
take a commission; by this definition, then, they could not be purely called brokers. A
wholesaler, on the other hand, is deemed to be one who sells goods in large bulk or
quantity, especially for resale. This description, however, fails to capture the essence
of matching up pallet mill capability with pallet user demand, which is a core ingredient
of the pallet industry middle-man function. The definition of distributor has a similar
failing: one who distributes or sells merchandise, usually of a specific type or category.
"The names are very much a nuance," said Lee Sherman,
president of Timber Industries, a pallet wholesaler based in Towson, Md. with offices in
Peachtree City, Ga. and Saratoga Springs, N.Y. Established in 1977, Timber Industries is
the successor to the Quincy L. Morrow Company, a manufacturer of wood pallets since 1933.
"They are interchangeable between broker and wholesaler," he
said. "There is no difference. For some reason, the pallet industry tends to call the
wholesalers ‘brokers’ where the lumber industry uses the term
‘wholesaler.’ But they are very much interchangeable, at least in my
context."
"There’s no difference from what I’ve seen, and
I’ve been in it for 26 years," agreed Joe Smith, president of H&S Forest
Products, a broker based in Columbus, Oh., with a branch office in Collierville, Tenn. Now
with over $20 million in sales annually, H&S has been in business since 1990.
Part of the difficulty in "branding" the service these type
of companies provide is that some pallet mills have been treated poorly by the middle-man.
"A few mills got burnt, and maybe they weren’t dealing with reputable
wholesalers," said Joe. "They’ve been stung. They don’t like the
terminology ‘wholesaler,’ so maybe the term ‘broker’ is better."
Other middle-men say that they also like the term broker as well, but
there is no clear consensus. Some prefer to be called wholesalers.
Adian Industrial Sales is one of the longest serving brokers in the
industry, dating back to the company’s inception over 36 years ago. "I guess
broker is what we consider ourselves," said Worden Teasdale, president of the
Toronto-based company. "We’re the middle-man between the manufacturer and our
customer. We broker a deal. Our company has been a broker since it first started in
1962."
Most of Adian’s customers are in Ontario and the "border
states" although it has single customers as far away as Ohio and Virginia.
"The broker is a term that is more comfortable for the
end-users," said Tom Losinski, president of Mid-Central Pallet & Supply in
Wavzata, Minn., a pallet broker for the last 15 years and a pallet salesman for six years
prior to that. "They seem to identify with that term rather than the
‘non-stocking’ distributor, which is what I consider myself to be."
While Tom believes that some brokers have tarnished their image over
the years, he is not sure whether the poor image relates to brokers specifically in the
pallet industry or to brokers in general. However, he believes the image of broker is now
changing in a positive way.
"Most suppliers that I come in contact with in our trading area do
either new or used or crating, but they don’t do the whole range," Tom said.
"I think that it has been the demand from the end-user that has determined what we do
for them. It’s the number of vendors they are dealing with, and the one-stop
shopping, that sort of thing."
Like other brokers or distributors, Tom believes they offer advantages
in terms of a wide product mix and broad geographic capability — benefits that
increasingly are attractive to pallet users. By working with several pallet plants, a
broker can meet the needs of customers that have multiple locations as well as those of
customers with a range of pallet and crating requirements. This is especially attractive
to some pallet users who want to reduce their list of vendors.
"In some cases the customer requires more than a bare bones
pallet," Worden pointed out. "He may have a number of different packaging items
he requires and we can assist him with. He may need pallets and boxes — maybe plastic
pallets or plywood, softwood, hardwood or whatever." Adian Industrial has one
customer that it supplies with various items from three different pallet companies, he
said.
Brokers can effectively match up different locations of a pallet user
with appropriate local pallet plants. "An account may have a plant in Columbus and
another one in Memphis," said Joe. "A customer can use us to both locations or 5
locations or 10 locations."
Successful brokers like to establish an ongoing relationship between a
pallet mill and a pallet user location so that the pallet plant can become familiar with
the customer’s pallet needs.
Customers may also benefit from the professional approach to sales that
large brokers can provide. Adian, like others, provides customers with computer-assisted
pallet design, typically PDS (Pallet Design System), as well as a depth of materials
handling, pallet, and customer service experience.
"We supply PDS, we supply repair services, and used pallets,"
Worden said. "They can get it all through dealing with us."
"From a customer standpoint, we offer, I believe, great peace of
mind," Lee said. "We are there for them (if any problems arise). If one of our
mills burns down, for example, we replace it. We will fit into that equation."
Pallet brokers are most popular with pallet plants without a dedicated
sales force or with a limited sales staff. "The advantages for manufacturers dealing
with a broker varies very much from manufacturer to manufacturer," Lee said.
"Some manufacturers do not have a sales force, so you tend to concentrate through
brokers." If a pallet company does have a direct sales force, the broker endeavors
not to compete with a direct account. "We’re not in the business to muddy the
water. We are in the business of giving our pallet mills business, not taking it
away."
A broker can give a local pallet company some of the advantages of a
national company by providing it with accounts farther afield as well as matching it up
with local branches of multi-location pallet users. "I think the main thing we bring
to the table is being able to secure customers that are probably out of their normal
shipping area," said Joe. "And we do everything. We send them a print of the
pallet to be built. We use a CAD (computer-assisted design) system, so there is no
question about how many boards, how many nails, how many stringers, and the size of the
stringers, and (as a result) there is no problem."
One of the key benefits for pallet mills, the brokers emphasized, is
timely payment according to negotiated terms. "We pay real quick, so they have no
receivables as such, other than about five days," said Lee. "We have the
responsibility of collections. So if one of our customers files a Chapter 11, that’s
our responsibility. Unfortunately, it does happen to us. Our thought process is that they
are our customers, so if there is a risk, the risk has to be ours." Prompt payment
also allows pallet plants to effectively plan their lumber purchases from sawmills.
As for which broker a pallet operation should select, Tom cautioned
that pallet producers should make themselves aware of a broker’s background and track
record. He suggested learning about the broker, his areas of expertise, and his depth of
knowledge — not only in pallets but also in the sawmill industry and material
handling. "You have to bring a broad base of education and experience to the
table," he said.
Another thing a pallet mill should ask, according to Joe, is if a
broker can sell all types of pallets so that the plant can fully utilize its lumber.
"There are going to be some mills that do GMA, but that’s okay if you’ve
got the lumber to do that," he said. "But there are a lot of mills that are
getting cants from 8 feet to 14 feet. And you need 36 squares and 42 squares and 48-by-40
and 48 squares to utilize all their lumber. That’s what we try to do. It goes back to
the old way, but that’s the way we like to sell — to help out the mill."
Brokers like Lee emphasize that their success is linked to establishing
long-term relationships between themselves, pallet suppliers and pallet customers. Others
agree. "We’ve been doing business with some mills for over 20 years," Joe
pointed out. "There is a trust and a loyalty factor that I don’t think you can
put a price on, really."
In a business environment that displays an increasing trend toward "single
stop" pallet procurement at the corporate level and the need for broader geographic
coverage, such as that offered by national companies, pallet brokers believe they provide
locally-owned pallet companies a way to keep pace in a changing market.
