May 7, 2014
Is it Time for the Widespread Adoption of Composite Pallets in Canada?
Millions of pallets are built and used in the supply chains of Canada every year and so any innovation around these pallets can have a significantly positive and far reaching impact on overall logistics and supply chain performance.
The introduction of composite pallets is just such an innovation and in my humble opinion they are poised to be a major catalyst for supply chain improvements in logistics cost, service and supply chain sustainability.
As I began to research the use of composite pallets getting specific information on them, such as current levels of use and other details, was actually difficult. This was due to the fact that in all studies I’ve found to date, they are lumped into the category of plastic pallets even though they are different in some very important ways.
Let’s start by more specifically defining both Plastic and Composite pallets, followed by a quick comparison on some key characteristics.
Plastic pallets refer to pallets made of a thermoplastic polymer, the method of manufacture varies depending on the style and loading requirements, typical processes used include thermoforming, injection molding, and blow molding. The type of the material used is dependent on the manufacturing process and the majority of plastic pallets for the transportation and warehousing of goods are made of non-renewably sourced polyethylene or polypropylene resins.
Composite pallets are made of a reinforced thermosetting polymer (also known as FRP) and are a combination of various elements formed to create a single material. Composites can range in makeup and complexity, from high cost carbon fibre to lower cost bulk molded compound use in electrical applications. The oil or wetting percentage of these composites is very low compared with fossil fuel derived feed stocks for plastic pallets which are 100% tied to the price for a barrel of oil. With pallet materials in general, its about the cost to weight ratio, and this is where composites win hands down over wood, metals, and plastics. The preferred method to manufacture FRP is compression molding. The resins used for a composite pallet can be sourced from either non-renewable petroleum or renewable bio-derived feed-stocks.
Going beyond these basic material, manufacturing and other key characteristics, the below chart identifies the Advantages and Disadvantages of both Plastic and Composite pallets.
So now we’ve defined and differentiated between Plastic and Composite pallets and based on my findings Composite pallets are a better choice than Plastic due to three key reasons. Namely these are, one that Composite pallets have typically a longer life cycle, two, composite pallets use safer fire retardants ie;(no deca bromine) and most importantly, when it comes to pallet pools, the fact that there’s no black market for composite materials, meaning pallet loss due to theft will be greatly reduced if not eliminated.
Currently wood pallets are by far the majority used for logistics applications in Canada, however due to a number of key factors such as transportation benefits, the nature of pallet pools, growing interest in the reduction of carbon footprints and last but certainly not least the process and data analytics benefits available through multiple embedded RFID chips serializing all pallets in the composite pallet pool. Both wood pallets (with possible water absorption) and plastic pallets (with steel reinforcements) can interfere with RFID performance decreasing the read rates and overall reliability of the RFID program.
Transportation Benefits:
The first of the benefits of utilizing Composite Pallets are the transportation savings they can create versus traditional wood pallets. In Canada, stringer and block wood pallets weigh on average 65 to 85 pounds, and up to 30 percent heavier when wet). Composite pallets weigh from 50 to 60 pounds on average for a 9 block and therefore every mile merchandise is transported using a Composite pallet versus a Wood pallet generates a fuel savings in the form of a cost per ton mile reduction the amount of which will vary depending on a number of factors.
Pallet Pool Management Benefits:
Obviously one of the biggest challenges facing pallet pools is the loss of pallets which lead to high costs for pallet replacement. Again RFID can help with this and as stated above Composite pallets are better suited for use with RFID chips. But probably the most significant positive factor in favor of Composite pallet pools is that there is no black market for the Composite materials used in the pallets due to the specialized equipment and methods required for working composite materials. On the other hand there’s a large black market for plastic which can easily be ground up and sold for reuse. Likewise wood pallets are often taken for other uses and there’s a significant used wooden pallet market where pallets disappearing from the pool can be sold.
Carbon Credit Creation:
In addition to the transportation savings generated through the use of Composite pallets versus wood pallets, based on my recent research, there is even one composite pooled pallet offered that is light weight, utilizes RFID and bar code technology in conjunction with its cloud based software and it is best in class weight for it’s 9 block edge rackable 2,800lb rating, which allows it to qualify for generating carbon credits. In fact it is the only pallet on the planet that can do this. The company offers the carbon credits back to its users helping to lower the overall costs of shipping and logistics. No matter how low the price of wood goes, it can never generate carbon credits, because even if the weight came down, there is no way to machine generate the data that the VCS needs in order to verify the savings. In this case the use of certain Composite pallets can also be configured to generate VCS carbon credits. This market entrant actually generates carbon credits which can be calculated and then ultimately retired by either putting them towards a reduction of a company’s corporate carbon footprint or by monetizing them through direct sale on one of the available carbon credit exchanges.
Potential Process Benefits:
Beyond all the benefits described above, due to Composite pallets being well suited, if they use with RFID technology, they are perfect for supporting both vertical process benefits and horizontal collaboration benefits. Previous pilots and companies we have been involved with have proven vertical process benefits of 50% receiving productivity improvements for DC pallet receipt, and 85% productivity benefits for Store receipt of RFID cases on RFID pallets. In the case of horizontal collaboration benefits transportation synergies of 10 to 15% of overall freight costs have been proven facilitated through the use of RFID pallets.
The above represent some very compelling reasons for the widespread implementation of Composite pallets in Canada and beyond. Introducing Composite pallets on a widespread basis as a significant portion of the millions of pallets built and used in the supply chains of Canada every year is an innovation which can have a significantly positive and far reaching impact on overall logistics and supply chain performance.
In addition to the direct business benefits identified in this introductory article, wider economic benefits can also be generated and suggest governments seriously consider how they can stimulate and accelerate the introduction of Composite pallets. Examples in this case include Supply Chain Data Collection to better understand transport flows, needs and utilization, encouraging increased use and reuse of Returnables in supply chains, advance Electronic Commerce for Logistics as well as Connective & Tracking Technologies such as RFID & GPS, not to mention the use of standard pallet pools with RFID will better support the use and proliferation of Supply Chain Standards.
As noted above Logistics Collaboration Initiatives could support both vertical process and horizontal (cross company) collaboration representing savings of $15 billion annually enhancing overall business productivity. Last but certainly not least also help to put Canada in an environmental leadership position in Logistics as the supply Chain represents 75% of most companies carbon footprint.
As you can see Composite pallets can be a major catalyst for supply chain improvements in cost, service and sustainability with my only remaining question being; is it time for the widespread adoption of composite pallets in Canada?
Jeff Ashcroft
