Pallet Cleansing

There are over 2 billion shipping pallets in circulation worldwide with an estimated 8 billion units by 2027. More than 500 million pallets are manufactured in the U.S. each year. 90% of these pallets are wood – attributable to their low-cost and relative ease of being remanufactured or repurposed. In short, the shipping pallets industry is big business (just ask CHEP and PECO), but one that hasn’t made the leap into the future … yet.

My friend, Nate Kelly, owns and operates Kelly’s Four Plus, a granola company based in Norwalk, Connecticut. Outside of product ingredients, pallets are the lifeblood of his business. They’re essential for shipping his granola to distributors and stores across the country, but when they aren’t in use, they take up precious floor space in his storage rooms and shipping bays. Like many CPG manufacturers, Nate sees the gap in inventory management on the part of the companies who rent and sell these pallets firsthand, and he’s in need of a solution.

At Arcspring, our thesis can be distilled down to this: we take analog companies and create additional value by transforming them into digital enterprises. The shipping pallet industry is ready for this type of reinvention, and the steps forward involve some interesting and atypical uses of technology.

Pallet Inventory Management

You’ll find them leaning up against dumpsters, piling up in landfills, or in the dark corners of warehouses. Shipping pallets are incredibly useful when companies need them but are often neglected when they don’t. But with literally billions in circulation, how do you keep track of those in use and those sitting idle? Simply, RFID.

RFID, or radio frequency identification, is used across the globe to track tags attached to objects. Think key fobs, contactless payment kiosks, or automated tolls. The cost of RFID has become incredibly cheap with most “tags” costing under $.50. Placing one on a pallet will not only help keep track of the pallets, but RFID tags are easier to use than barcode scanning each pallet individually.

From there, along with a SaaS solution, pallet distributors can keep a close eye on the usage of their pallets within each company – moving their product to hot spots and reducing the amount the excess in shippers' warehouses.

Additionally, because RFID tags are made of metals, they can be recycled along with the rest of the pallet once it’s reached the end of its lifespan.  

Manufacturing

By and large, shipping pallets are wooden. They’re relatively cheap to produce, sturdy, and easy to recycle. (A recent study found that nearly 95% of all wood pallets end up recycled) And while this is undoubtedly good news for both ends of a pallet’s lifecycle, there is an emerging option that makes them even easier and cheaper to build and incredibly effective to environmentally dispose of: 3D-printing.  

Printed using wood filament, the pallets can be just as sturdy as PVC. And because the wood filament is a composite, it can be made of readily available woods such as bamboo, birch, and coconut. While wood filament does contain plastic, it remains recyclable. Further, with the removal of nails from the equation, each pallet becomes easier to breakdown.

Adding 3D printing into the pallet supply chain means less inventory management and savings on shipping costs. While an upfront investment for the hardware is required, the savings become exponential as more and more 3D printed pallets enter the ecosystem.

Sharing

What Bird Scooters did for last-mile commuting, we can do for pallets via crowd-sharing. Instead of ordering a set amount of pallets that will take up room in their warehouses, companies would be able to subscribe to a pallet service and gain access to pallets across their community.

Available at certain warehouses or shipping locations, companies could pick up the exact amount they need and be on their way; handled by RFID and managed through a smartphone. When companies have excess pallets, they can simply return them to a drop-off location and get reimbursed for the trade-in.

Incentives for items like on-time returns or reporting damaged pallets would earn points for discounts or other shipping goods. Ultimately, shippers would not only have less pallet inventory taking up room on-site, but they’d be rewarded for actively participating in the pallet ecosystem.

Denouement

There is no glamour in the manufacture and distribution of shipping pallets. No one ever became famous for finding a better way to ship bulk orders of granola. But pallets are an incredibly vital (if unseen) part of our lives. And as online ordering reaches staggering heights, it's these pallets that are doing the heavy lifting. (Forgive the pun) It's time technological advances came to the pallet world in the form of RFID inventory management, 3D manufacturing, and crowd-sharing availability.