When it comes to material handling trends and how they may be shaping customer preference for pallets, what are the potential market disruptors that you are tracking? The following are some key trends that you should be following.
Walmart Buys into the Appeal of Wood
This is probably the closest to a new trend on my material handling watch list – a fresh acknowledgement of customer preference for the wood “look.” With Walmart just revealing that it intends to have its reusable plastic container (RPC) suppliers, IFCO Systems and Polymer Logistics, transition completely to wood grain RPCs from the existing industrial black style for perishable products, surely this speaks to the benefits of wood from a marketing perspective.
After trials at Walmart in the United States and Carrefour in Europe, both chains concluded that an attractive wood grain RPC can help boost fresh produce sales versus black plastic crates. While they are moving in this direction, why not specify bright new whitewood pallets for any floor display pallets to further increase the farm fresh ambience for the fresh produce section? We’ve seen whitewood pallets as merchandising aids at Costco and other retailers, for example, and perhaps this could be a growing opportunity for retailers at large to help boost their wood grain quotient. We frequently bemoan the lack of new whitewood pallets entering the pool, but if I was a leading retailer thinking about injecting more new whitewood pallets into my store format, and there was a creative buyback opportunity for the empties, why would I hesitate?
Core Shortage and Pallet Price Increases as a Driver for Custom Pooling
In the recent webcast from Modern Materials Handling, “Money Hiding in Plain Sight,” Dr. Mark White stressed what he sees in his own practice, and what he interpreted from survey results, that industrial pallet users (as opposed to consumer products applications) are increasingly interested in having pallet providers manage returnable pallet systems where they provide a more attractive price point than expendable pallets. Pallet companies such as Doug Moore’s Mid-South Lumber pioneered pallet retrieval services over 20 years ago, but perhaps the time is right for that practice to finally go mainstream. Improved tracking and transport management technologies, combined with higher pallet prices, might be increasingly turning the needle towards custom pooling opportunities.
Trend to Smaller Format Retail Outlets and Floor-ready Display
As retailers such as Walmart continue to shift towards smaller footprint local stores such as Walmart Express, and convenience stores look to also compete more efficiently for the urban shopper, there is an increasing case for smaller footprint pallets. Plastic pallet suppliers such as ORBIS and Rehrig Pacific have aggressively targeted this niche, and for its part, CHEP launched its half pallet a few years ago with the goal of positioning the rental giant to serve the small format retail and floor-ready display needs of its customers.
There is also interest in a low-cost way of increasing retail aisle and warehouse product facings. A narrower pallet translates into locations for more items in stores and warehouses bursting at the seams with too many products.
I still see a lot of miscellaneous white-wood, half pallets moving through consumer products supply chains. I wonder if there is an opportunity for some kind of voluntary standards around 20×24-inch and 48×20-inch sizing to increase the potential for reuse.
Sustainability Winners & Losers
Sustainability can be a solid advantage for wood, providing the entire life cycle is addressed – as increasingly it is in many supply chains. There is, of course, competition on the sustainability front from extremely durable alternative products. But the catch is these alternatives only work as long as they don’t get lost or converted into granules by resin thieves. There are also movements in certain applications to promote nestable plastic pallets that offer reduced load weight and greater empty pallet return ratios.
One provider, Polymer Logistics, is offering incentives for distribution centers to use its plastic nestable pallets through contributing to steel shelving to support what would otherwise be non-rackable pallets. Another nestable plastic pallet provider, IP Group, says that it saves one of its customers 253 truckloads per year through the ability to nest the empty pallets. Wood pallets can of course be nestable, depending upon the bottom deck configuration. Nesting empty Euro pallets is an accepted practice in Europe.
Increased Automation Requires Higher Quality Pallets
Pallet companies are hard pressed to find and retain great talent, and it also holds true for pallet customers who continue to kick the tires on automation. Automation has been on the radar when it comes to pallet quality requirements for two decades, and with investment in automated storage and retrieval systems pegged to grow at 7.2% annually through 2020, this will increasingly be a topic of interest to pallet people. When I interviewed Jeff Liebesman of iGPS at PACK EXPO, one of the things he was most excited about was how well he feels the iGPS pallet is positioned to work well with higher levels of automation.
Big Data & Analytics
It seems that everywhere in life we are receiving (and wanting) more and more actionable data. This ranges from our credit card spending habits, to per trip gas mileage to obscure statistics about professional athletes.
Big data hasn’t really taken hold of the pallet market, however. We are still waiting for this to shift more emphatically in the direction of pallet users needing smart pallets with sensors and tracking devices. While these are deployed in a few situations, some providers in the most promising applications continue to wait in a holding pattern.
What we are seeing is the importance of accurate billing, invoicing and monitoring of transportation routes to reduce supply chain costs. And you must have data systems in place which move to track everything from delivered loads to specific customer requests.
Food Safety Drives Sanitation Concerns
Food safety considerations continue to be a focal point at recent trade events such as PACK EXPO, although pallets are typically not part of the conversation. For their part, plastic pallet vendors, continue to report strong interest from the most sensitive applications, such as pharmaceutical and food production clean room environments.
For supply chain applications more generally, wood pallet providers will continue to do well by ensuring that they have a robust quality assurance process. Since most pallets are not intended for direct food or drug contact, the risk of contamination is minimal.
The bottom line is that there a number of ongoing material handling trends that can influence the pallet market. If one of those disruptors gives your customer pause to reconsider pallet requirements, being on top of the situation will serve you well.
