Are you having trouble finding
enough used pallet cores? Do you have trouble finding more than one reliable source of
used pallet parts?
Have you ever considered your local landfill as a "source?"
In 1995, more pallets ended up in landfills than at pallet
recovery-repair companies. Virginia Tech and the U.S. Forest Service have developed a
business plan spreadsheet model to encourage pallet recyclers and landfill operators to
work together to provide new sources of pallet parts and pallets while reducing
landfilling. This source of pallet parts could work for you.
Pallets and Landfills
Wood pallets break or end up in places where they are not needed. They
can become a waste problem. Many find their way to pallet recovery and repair facilities,
but many are sent to landfills. Some are taken to landfill recovery operations, but a
large number are placed in municipal solid waste or construction and demolition
no-further-use waste areas.
Landfilling is a waste of the pallet resource. There are better options
that reduce landfilling of unwanted and discarded wood pallets and facilitate reuse of the
pallet material. A feasible option returns the pallet material (parts or pallets) to
pallet companies that rebuild, repair, and make pallets from used parts.
Consider the magnitude of the pallet situation. Each year a large
number of new wood pallets are manufactured using a significant percentage of the hardwood
lumber and cants produced in the U.S. — 4.5 billion board feet in 1995. Less
significant portions of softwood lumber and cants are also needed — 1.8 billion board
feet in 1995.
Once used, pallets are not necessarily discarded. In 1995 over 170
million wood pallets (2.6 billion board feet) were received by the pallet and container
industry for repair or recycling. Almost 150 million were repaired and resold to pallet
users.
However, the pallet retrieval-recovery system is not perfect, and wood
pallets end up in landfills. The combined landfill totals (construction and demolition and
municipal solid waste facilities) show that over 223 million pallets (6.14 million tons)
passed through landfill gates in 1995. Approximately 17% (38 million pallets or 1.04
million tons) were recovered, mainly to low value uses and products.
Landfill operators would welcome markets for pallets or pallet wood
that would return more money to their facilities. Many landfills have grinders and more
would likely add grinders if they could be assured of an economical market for ground
pallet material. They would also be interested in adding additional equipment to increase
revenues and in partnering with pallet recovery firms.
Our research has found that discarded pallets at landfills could
provide good raw materials for repairing pallets and for building pallets from used parts.
Some parts could be converted into other products. However, many questions need to be
answered before landfill recovery operations or pallet companies will consider investing
capital to reclaim material from pallets at landfills. How many wood pallets are sent to
the landfill? Can they be recovered? Are any being recovered? Are there opportunities to
increase recovery? Are there higher-value options than present recovery methods such as
grinding for fuel and other low-value products? Is recovery economically viable?
To help answer some of these questions and provide information for
business plans, the Center for Forest Products Marketing and Management and the U.S.
Forest Service Southern Research Station unit, both at Virginia Tech, have developed a
computer spreadsheet model called PROACT (Pallet Recovery Opportunity Analysis Computer
Tool). PROACT focuses on pallet recovery and reuse options for pallets prior to
landfilling.
In the remainder of this article we report on pallet recovery options
and present the results from a sample spreadsheet business plan developed using PROACT.
The plan shows the economic potential of recovering pallet materials at a landfill given a
set of conditions.
Recovery Options, Values
Discarded pallets can have value based on their size, condition, and
the species of wood used in the pallet parts. For example, pallets in standard sizes
needing no repairs are reusable and marketable. This represents the highest value use.
Pallets can also be disassembled and the parts can be converted to standard or marketable
sizes and sold to pallet recovery-repair companies. Some of the better parts could also be
converted to products such as flooring, paneling or furniture.
The values of these recovery options can be expressed in terms of a
standard 48×40 pallet as shown in Table 1. A ground pallet would be worth 25 cents for
fuel or up to $1 if a panel furnish market is available producing particleboard or medium
density fiberboard. Other uses of the ground material would be densified fuel pellets,
animal bedding, mulch and colored mulch. The same pallet could be worth between $3-$6 if
sold as a pallet or between $2-$3.50 if taken apart for repair replacement parts. These
values depend on the quality of the pallet and how many useable parts can be removed from
the pallet. The 48×40 pallet could also be worth between $5-$8 in flooring produced from
good deck boards with the remaining parts sold as replacement pallet parts.
| Pallet Recovery Option | Potential Market Value of a Standard 48×40 pallet |
|
Ground for |
25 cents |
| Ground for use in board products @ $40/ton |
$1 |
| Resold without repair (a) | $3-$6 |
| Disassembled for repair replacement parts (b) |
$2-$3.50 |
| Disassembled for flooring, replacement parts (c) |
$5-$8 |
Landfill Recovery Operation
To help private or public operations evaluate the feasibility of
pallet recovery, we developed PROACT. The computer model requests basic information
describing the pallet recovery project being considered. Among the input information
requested are equipment and facility requirements, labor requirements, incoming pallet
quantity and type, material processing plans, tipping fees, and product selling prices.
PROACT uses the input information to simulate the pallet recovery
project’s operations and to estimate the project’s cash flows. Output includes a
summary report, tables displaying the flow of material through the project’s
operations, revenues by source, and a complete cash flow analysis table. Charts
illustrating the sensitivity of profits to tax rates, cost of capital rates, revenues by
product or service, and key cost categories also are generated.
The summary report includes the initial cost of the pallet recovery
project and the profitability using the net present value, the internal rate of return,
and the modified internal rate of return methods. The tonnage of wood diverted from
landfilling and the recycling efficiency is indicated as well as the total labor cost over
the life of the project. Lastly, in the summary report the average revenue generated per
pallet recovered is estimated.
To illustrate PROACT and the potential economics of recovering pallets
at a level higher than grinding, we created the following hypothetical operation. In this
operation, a landfill recovery operation or an independent company would:
• receive pallets for a tipping fee
• separate standard 48×40 pallets needing no repairs to
sell to pallet recovery-repair companies
• disassemble most of the remaining pallets and salvage
usable parts for sale to pallet recovery-repair companies
• load pallet recovery-repair company trailers at the
landfill recovery site with pallet parts and no-repair-needed pallets
• grind the remaining parts or bad pallets into fiber as
currently done, and
• consider the possibility of, at a later time, separating
the best parts for conversion to products such as flooring, furniture or paneling.In year five, the sample recovery operation simulated in PROACT would:
• receive 1,000 pallets per week in year 1, growing to
1,800 pallets per week
• charge a $25.00/ton landfill recovery area tipping fee
• offer no pallet pick-up service
• sell approximately 180 48×40 pallets per week not needing
repairs at $2.50 per pallet
• dispose by grinding 360 pallets per week due to thin
boards or an insufficient number of recoverable parts
• disassemble 1,260 pallets per week with industrial band
saw dismantlers (this equates to 36 pallets per hour or 0.6 pallets per minute)
• process, if needed, the recovered pallet parts to
standard or demanded lengths with crosscut and trim saws
• sell the recovered pallet parts to pallet recovery-repair
companies (20 cents per deck board, 50 cents per stringer and 15 cents per half-stringer),
and
• employ eight workers.
The above operation would, over a 5-year period:
• collect $966,500 in total revenue ($230,000 in tipping
fees, $87,500 in whole pallet sales, $237,000 in stringer sales, and $412,000 in deck
board sales)
• receive 350,000 pallets or 9,188 tons of wood, recycle
5,345 tons of pallets and parts, and grind 3,843 tons of wood
• achieve a 58% efficiency in solid wood recovery (if the
ground material is sold or used this could approach 100%)
• return $2.76 per pallet received
• cost $96,000 to establish (purchase and set up equipment,
building, working capital, etc.) and attain a 23% internal rate of return.
PROACT Bridges Gap
PROACT, the spreadsheet program, can be used to plan and virtually
test the feasibility of pallet recovery operations. Pallet recovery-repair companies can
approach local landfills or recycling coordinators and demonstrate a sample operation
using PROACT. They could show recycling coordinators the economics of setting up a pallet
recovery operation to provide them with used parts. All parties could get a much better
understanding of such things as the number of pallets needed and prices required for a
viable operation. PROACT variable inputs can be easily changed to test different
scenarios. PROACT can help bridge the gap between idea and implementation.
Summary
Pallet material recovery-recycling operations at landfill facilities
can be economical while reducing pressure on landfill capacity. They could supply needed
pallet parts and pallets back to pallet suppliers and reduce hardwood and softwood timber
demands. Furthermore, the anticipated banning of pallet landfilling at many solid waste
facilities could force huge amounts of pallets to recovery operations.
PROACT, the computer spreadsheet model, can help to bridge the gap
between landfill recovery operations and pallet recyclers by helping to plan and virtually
test pallet recovery operations. These on-site landfill recovery operations are a real
opportunity for pallet companies.
(Editor’s note: Philip A. Araman is project leader with the Southern Research
Station, U.S. Forest Service, Blacksburg, Virginia. Robert J. Bush is an associate
professor with the Department of Wood Science and Forest Products and director of the
Center for Forest Products Marketing and Management at Virginia Tech, and A.L. Hammett
also is an associate professor. E. Bradley Hager is a graduate assistant. For more
information about PROACT or this article, call Araman at (540) 231-5341. This paper was
presented at the Recycling Meeting and Exposition sponsored by the National Wooden Pallet
and Container Association and held in December 1998 in Florida.)
