The U.S. and European pallet markets are very different. From the pallet designs to the systems, and unfortunately, the European industry seems to be better fit for the warehouse of the future.
U.S. logistics systems are increasingly designed with more automation. The concept of a warehouse with fewer workers is leading to technology that doesn’t function well with inferior quality pallets. This is where the Europeans have the U.S. industry beat. They have real standards and mechanisms to enforce quality control. The U.S. industry does not.
The situation in the United States continues to get worse. For example, the recycled white-wood pool keeps deteriorating. And yes, a shortage of recycled pallets does mean new ones are being inserted into the pool. Unfortunately, the race to contain cost increases is leading new pallet manufacturers in the United States to make pallets with less and less lumber each year. As a result, the U.S. pallet industry seems to be on a collision course with changing supply chain trends that may force higher quality pallets.
It isn’t as if the pallet customers are completely blameless in the equation. They want cheaper pallets and better service. This comes at a cost. And for decades, the cost has been the quality of the pallet. While pallet design software can be used to better optimize unit load and pallet design, it can also be used to cheapen a pallet. And that is what many pallet suppliers have done in the United States to keep prices low for customers.
By contrast, the European market has a strict quality standard that is patrolled and maintained in the EPAL Euro-pallet pool. While there is some cheating and fraudulent pallets on the market, quality standards are maintained as well as possible. Most of the fake pallets come from producers in eastern Europe who are trying to undercut the market. But EPAL vigorously pursues fraudulent pallets and work with European rail and government authorities to protect the viability of its pool. For example, in 2019 Lithuanian Customs detained several different pallet cargoes for being shipped on fake EPAL pallets. Courts in many European countries have banned the import of counterfeit pallets.
There is no such industry-wide quality standard here in the United States nor mechanism to enforce such regulations. But it could be developed. Otherwise, you will see more of the loads going to rental pools controlled by one of the major poolers, such as CHEP or PECO Pallets.
Are pallet customers really moving toward automation that will require higher pallet quality standards? Let’s examine a few recent events.
The nation’s largest brick and mortar retailer, Walmart Inc., is adopting an automated pallet-packing system that it has been testing in 25 of its 42 regional distribution centers. Now it is integrating the system into its regional network. High-speed mobile robots will sort, store, retrieve and pack freight onto pallets. An algorithm seeks to maximize storage space by organizing loads.
Jim Metzger, executive vice president of supply chain operations for Walmart, said that using robots to organize and optimize freight “creates custom store- and aisle-ready pallets, which take the guesswork out of unloading trucks.” He added that the technology is a “game changer” and will “fundamentally alter how products get to stores.”
For Walmart, the robots save time, limit out-of-stocks, improve worker safety and increase the speed of stocking and loading.
In a separate situation, robotics firm Geek+ is launching the Smart Mixed Case palletizing solution that seeks to eliminate re-palletization and optimize space utilization. A key component is autonomous forklifts that load pallets onto trucks. The overall goal is to increase truck utilization by 30%.
In another technological development, Stoecklin Logistics is designing warehouses where Automatic Guided Vehicles (AGVs) replace forklifts and conveyors to move products. AGVs used to be only for specific applications, such as moving huge rolls of paper in a printing press facility. Now, the systems are becoming more economical for more vehicles to replace forklift traffic flows.
Bernd Krebs, product manager for AGVs at Stoecklin Logistics, said, “Manual forklifts tie up manpower, so employees are relieved from repetitive or constant transport processes by automated transportation with AGVs. Ideally, the employees can use their time to perform more complicated or more demanding activities and only be used for special transport movements. Although AGVs are slower than manual forklifts, they provide a more uniform and above all more material-friendly transport process with lower maintenance costs, compared to manual forklifts. Further, the number of accidents and damage to property and infrastructure decreases significantly… With an AGV system, there is much more flexibility. Once a conveyor system is in place, it is difficult to change or add to it. An AGV system, on the other hand, does not have this problem. Small adjustments can be made within a few minutes, sometimes even remotely.”
All of these benefits suggest that you will see more AGVs in the future not less. So, that gets us back to the issue of pallet standards and quality. The U.S. industry needs to work toward developing a consensus standard. Much of the research has already been done by previous groups, such as the SPEC program, Pallet Asset Recovery (PAR), Pallet Industry Management System (PIMS), Canadian Pallet Council (CPC) and 9BLOC. I think the U.S. pallet industry should study these past efforts. Look at what worked and what didn’t. Hold a series of listening tours and conversations with pallet users to understand how this pallet standard should be uniquely designed for the supply chains of the future in the United States.
There are a few unique hooks that can be used this time to help sell better quality to pallets users – sustainability, circular economy and automation. See the article on the circular economy and pallets on page 26 in this issue. As the supply chain changes, the pallets need to change. I know these are conversations that we have had in the past. But the time may have come to have them again in earnest and to work toward better consensus standards in the United States. The Europeans have done it. We can too.
