The power of pallets
No offense to pallets, but as David Kalan puts it, they’re not very sexy.
“It’s a sure guarantee at a cocktail party how to get people to walk away from you when they ask you what you do,” said Kalan, senior vice president of marketing and business development for RM2 USA. “There’s nothing fancy about it.”
Still, pallets are a huge industry. When it comes to shipping just about anything, you generally don’t leave home without them. Ninety-four percent of goods moved do it on pallets, said Patrick Atagi, vice president, advocacy and external affairs, National Wood Pallet and Container Association.
“I always tell people anytime they’re in a major city and see endless semi trucks going down the road, imagine every one of those has 22 to 60 pallets on it,” said Kalan, who describes pallets as a stealth industry. “You start adding it up, and it’s a big business.”
According to Atagi, there are about 2 billion pallets in circulation at any given time in the United States – 93 percent of them wood.
Companies like Kalan’s are working to make a dent in that wooden majority with pallets made of alternative materials.
The other 7 percent
Headquartered in Switzerland, the 8-year-old RM2 manufactures its BLOCKPal pallets in Ontario, Canada. Soon it will also begin production in China.
Kalan earlier had worked for the original iGPS, which manufactured and pooled 48-by-40-inch plastic pallets in the U.S. iGPS’ current website said its NSF Food Equipment-certified pallets don’t absorb fluids that can lead to contamination, hold true to measurements, eliminate hazards involving broken boards and protruding nails and are 100 percent recyclable because old ones are made into new pallets.
“I was at iGPS the day the very first (plastic) palletized load of Gatorade came off the production line in Tolleson, Arizona,” Kalan said. “Seeing the plastic pallet work in a high-tech manufacturing facility like that was amazing.
“At that moment, I said to myself, ‘This industry just changed.’”
Costco bought into iGPS pallets, as did Walmart, Kalan said, adding, “Dramatically, iGPS started to fly.”
RM2’s idea was to come up with still another alternative – one that could stand up to extremely heavy loads like steel, last more than 100 trips and be repairable. Also, in most environments fire protection is a concern, and plastic pallets can be a problem, he said.
“Along the way, we experimented with different pallets and one was using composite materials,” Kalan said. “Composites have been around for many years and the way to explain it, it’s basically the foundation of fiberglass with some resin mixed in. That creates a very strong, lightweight material.
“Everything is related to weight. Everyone’s trying to get the weight out of everything, but everyone’s still trying to keep the strength.”
The BLOCKPal 48-by-40 pallet can edge rack 6,500 pounds and has a 60,000-pound static load rating. Kalan said RM2 worked with Virginia Tech to confirm the pallets’ performance. Other sizes are available. BLOCKPal has also received the FM4996 fire rating.
“The reason we wanted it extremely strong is so the pallet can be used in a pooling or rental situation, which must last numerous trips,” Kalan said. “These pallets, because of the cost to build them, in order to make the economics work, it must last 100 trips. We’re comfortable with a 150-trip range.
“We’re even bold enough to say in the correct environment – in a processing facility – these pallets can last forever.”
BLOCKPal’s low profile means 630 pallets can fit in a 53-foot trailer – more than the typical 540 wood pallets, which also reduces transportation costs, Kalan said. When they’re no longer usable, they can be ground up and recycled into materials like asphalt.
RM2 is selling its pallets outright – they run around $100 each – as well as offering rentals similar to a pooling model, by the trip or monthly, at rates Kalan said are equal to or lower than wood. It owns software that tracks its pallets to monitor where they are and control inventory.
The company is also doing some controlled loops – pallets start at Point A, go to Point B, then come back to Point A again – starting with some private label vendors who ship into Loblaws, a Canadian grocery chain. Among RM2’s customers for BLOCKPal are some produce companies in Salinas, California.
“We’re not going to be a CHEP or PECO (leading pallet pooling companies), or even iGPS,” Kalan said. “We’re not going to let this pallet go all over the place where it can get lost.”
RM2 will soon begin pallet production in China, in a joint venture with a division of Jushi, which manufactures fiberglass.
“The reason we’re doing it with them, obviously, is they make the material we need to make our pallets,” Kalan said. “It also opens up the Asian market for us.”
Paper or plastic?
When Green Ox Pallet Technology started in 2009, it was with a fervor to “take on the world” when it came to developing an alternative to wood and plastic pallets, said Colin Clark, director of business development. It’s been an evolution, but Clark said they’ve succeeded in developing a market for a pallet made basically from paper.
Using the analogy of how old- fashioned wooden crates gave way to corrugated boxes, Clark said the company has created a similar model for its pallets.
Starting with a design patented by a man in Florida who came up with the idea of making a corrugated box pallet so that it can be manufactured anywhere in the world and to whom Green Ox pays royalties now, now the company’s design team developed more than 17 patent applications for the technology.
“This is the first pallet that can be made in nearly every industrialized city in the world,” Clark said. “The corrugated box company infrastructure already exists and can make this pallet for us under contract, protected by the patent.”
Corrugated board is manufactured to the strength required for each pallet. It’s produced die-cut to specifications, in sheets. Then the sheets are assembled into pallets – either at a Green Ox subcontractor or at the site where they will be used.
“The two pieces fold together like origami and make our pallet,” Clark said. “There’s no staples or glue.”
Green Ox partner Edson, a division of Pro Mach, is designing a machine that will assemble them at a rate of between 200 to 250 an hour. Companies that use a large number of pallets would get a machine at or near their packaging line – approximately $350,000 each – on site.
“We will place them kind of like what I was told is the old Xerox model,” Clark said. “We will own the machines, when possible.”
Green Ox pallets are light, weighing about 10.5 pounds each, which saves on fuel costs during transportation, Clark said. They also reduce carbon dioxide emissions over their life cycle, and are completely recyclable while also being made with some recycled materials.
“IKEA testified in January on our behalf in front of the Oregon legislature to say ‘we switched to a paper pallet five years ago and we think the Oregon governor’s office should get behind this effort,’” Clark said.
The company’s standard size is the 48- by-40 that can hold up to 2,750 pounds in transit and up to 10,000 pounds static. They’ve got a round version that can support 1,700 pounds, and also manufacture custom sizes. For example, Green Ox has developed a pallet to specifications to fit strawberry boxes for a test it’s doing with one company.
“We’ve done tests with Whole Foods, with Aldi, with Wilco Peanut, with Giumarra Farms out of California – one of the biggest grape and tree fruit companies in the world,” Clark said. “We haven’t gotten into the produce processing so heavily yet, but we will.”
In fact, when it comes to produce, processors are the early candidates.
“And what happens if they get wet? We have them coated with the best of the best water-resistant coatings,” Clark said. “And if something like broccoli or cauliflower needs to be iced and has a lot of water running out of them, we can also make them in corrugated plastic – the same material water bottles are made out of, (though) it’s 50 to 70 percent more expensive.”
Green Ox pallets are designed for one-time use, though some customers get more life out of them than that, depending on the use. Clark said that’s a food safety advantage.
“One of the things about wood pallets is you never know (where they have been),” he said.
While they’re $13.85 apiece today (lower in bulk), Green Ox’s pallets offer considerable savings on such costs as shipping.
— Kathy Gibbons, contributing writer