Is the pallet industry too self focused for its own good? This thought came to me while attending a meeting of white wood pallet recyclers. The entrepreneurial American spirit has helped make the United States a world superpower. Entrepreneurs look out for their own best interest and self-preservation. While there is nothing wrong with being an entrepreneur, this rugged individualism can be a detriment in the face of a united competitor. The pallet industry consists of mainly small players run by entrepreneurs. This is one of the things that I love best about the pallet industry. Yet, the fragmentation of the industry continues to remain a stumbling block for the white wood exchange market as customer demands change. Users are looking more and more at pallet rental because it offers the ability to service national accounts with a unique solution to many pallet problems. Previous attempts to develop industry standards and unite small players in coalitions to service national accounts have failed to deliver on a large scale. These thoughts raced through my head as I attended a meeting where a new system for uniting recyclers was introduced to a select group of companies. Called the Pallet Asset Recovery (PAR) system, the program seeks to unite independent recyclers to service large national accounts while still preserving the individual integrity and autonomy of each member company. Alan Miceli, the president of PAR, made a strong case for why industry players should unite. He claimed that rental companies make $2 billion in revenue per year in the Americas. This is money taken directly out of the white wood exchange market. While many companies have replaced lost business, Alan pointed out that this process cannot go on forever. Most companies have replaced lost business by scrounging around for smaller accounts. Had it not been for size constraints more companies would have probably already switched to rental pallets. Unlike most rental systems, PAR will use white wood pallets. These pallets will be inspected, repaired to a high quality standard and tagged with bar codes according to Alan. The PAR approach does not require as much capital as a traditional pool because it will use many of the assets already in place among the member companies. “We don’t need millions of dollars to compete with the big rental companies…And right now, customers are begging for an alternative,” said Alan. PAR would service clients from member companies depending on customer demand and member company willingness to supply a particular client. If a member company decides to service a PAR customer, it would have to comply with PAR standards and rules for that particular account. PAR serves as the sales and administrative arm by putting together a national sales team, inspecting/policing quality, overseeing the record keeping, training members on tracking technology, billing PAR customers and managing the overall pool. Although PAR is not the first attempt to unite recyclers, its design is unique. Pallet Pallet
CHEP’s gains in the marketplace may convince enough independent recyclers to lay down their differences and work together. PAR intends to be the key hub necessary to ensure the viability of a white wood pallet rental system. But PAR’s success will largely depend on its members willingness to work toward the collective good.
There remain many details to work out and the viability of PAR is far from a sure thing. However, it points to what may be the future for the industry as more and more companies work together through alliances and rental systems. Is it better to fly solo or team up? You make the call!
