Supply Chain's Unsung Hero: The Wooden Pallet

The impact that wooden pallets and containers have on the supply chain as an important and sustainable stakeholder, especially how it impacts up the chain of supply and demand for the industry’s customer base, is a message that cuts across the cluttered decision making process that companies are faced with when choosing their distribution packaging.

We gathered insights from experts in the supply chain particularly around their ideas, concerns, questions, and what’s remaining top of mind. While most of these professionals didn’t “see” the pallet, they did see real challenges that needed to be addressed. Areas such as:

Sustainability

Reusability and recyclability

Strength, durability and customization

As we dreamt up and debated the components of a resilient supply chain, we found that most supply chain professionals didn’t take into consideration the invisible heroes that keep supply chain intact. We are working to change this perception, and enlighten supply chain architects that the wooden pallet was designed to fulfill a real need – not just a want. And that’s largely why, for many years, it has served as the sustainable solution for supply chains across the globe.

The good news coming out of the COVID landscape is that this unfortunate situation has significantly helped to raise the profile of the wooden pallet, as almost every supply chain is being reimagined in the process. But, we still have plenty of work to do.

Facts

As an industry, it is important that we demonstrate to our partners the value wooden pallets provide as a key resource to the supply chain.

Using an industry comparison, take an auto manufacturer vs. a Wal-Mart – two very different supply chains with a vast range of products that needed to be transported. A standard 48x40 pallet is not going to get every job done. Perhaps Wal-Mart may be able to use a 48x40 more often, given the lighter CPG products they’re bringing in. But they’ll still need to customize pallets for transporting electronics and other heavier goods. In fact, only one-third of all pallets are the 48x40 size!

And an auto manufacturer may need something more durable for shipping different parts of their vehicles that weigh hundreds of pounds. Our industry serves the unique needs or retailers with shipping solutions that meet their specific requirements because the pallet helps “move the world” efficiently and sustainably. From wide and thin to overly massive, we’ve broken down the customization of pallets to an exact science based on what products are coming in and going out.

We must continue to share this message whenever possible to bring awareness, to ensure that we maintain our seat at the supply chain table at all times.

Here are some great talking points to share with your partners as opportunities arise!

Wood Pallets are ubiquitous: Not only are pallets customizable, but they’re everywhere. By setting the example in terms of sustainability, we are giving the supply chain expert an opportunity to make their operations greener, more efficient and more effective.

Wood Pallets are environmentally friendly: The NWPCA relationship with the forestry community is one of our biggest priorities, and we have even gone out of our way to adhere to the International Standards for Phytosanitary Measures (ISPM) standards that protect forests and ensures our work does not put the health of our ecosystem at risk.

Wooden Pallet industry supports sustainment of the forests: In fact, each year, nearly 2 billion trees are planted in the U.S., which is more than five trees for every man, woman and child in America. Even better, our industry is a leader in sustainable forest practices. Forest certification involves independent third-party assessment that companies are operating in accordance with the principles of sustainable forest management that value the socio-economic and environmental contributions of forests. When you look at the four certification programs used in North America, we’re talking about more than 1.6 billion acres of trees. We’re proud to be a part of the progress happening with our forests, and when suppliers choose wood, they too can be a byproduct of that progress.

Wood Pallet numbers speak for themselves: There are more than 1.8 billion pallets in service every day. Think 90/90 – 90% of all products shipped on pallets, 90% of all those pallets are made of wood. We can often get caught up by the bright, shiny objects and techy innovations that wow us and paint a picture of a robot-driven future. But for the tens of BILLIONS of products that move across the U.S. every single day, it’s one simple material that makes it happen – wood.

Wood’s Role in Today’s Supply Chain

Pallets are often overlooked as an essential piece of the supply chain, but it is more than that. They are essential to the efficiency of the supply chain and its overall sustainability. As companies from every industry seek to shift their business models to further incorporate sustainability, pallets are a potential solution, not a roadblock.

At its most basic level, the supply chain includes five steps:

Sourcing new materials

Manufacturing materials into basic parts

Assembling basic parts into finished products

Selling products to end users

Delivering products to consumers The role of the pallet is within the whole chain:

Delivering raw materials for assembly

Shipping out goods

Distribution to retailers

Warehouse storage

Direct-to-customer delivery

So, what is it about wood that makes it the “lifeblood” of the global supply chain? There are several reasons, and most of them have to do with sustainability, reusability and recyclability, and customization.

The numbers tell the wooden pallet story:

Wooden pallets are a $31 billion industry in the U.S.

93% of pallets in the U.S. are made of wood

More than 90% of all products in the U.S. move on wooden pallets

95% of wooden pallets are recycled as of 2016 (in 1998, not even two-thirds of pallets were recycled).

Furthering a Sustainable Supply Chain

The investment cost, the time it takes to train colleagues and gain knowledge, the regulations you must play within, the lack of industry buy-in … all of these are factors that outweigh going all-in on a sustainable supply chain, right? Wrong!

Despite growing stakeholder pressure, many companies still do not have a comprehensive understanding of the performance, risks and sustainability impacts of their supply chain. It’s becoming increasingly clear that a sustainable supply chain develops positive return for companies. And wooden pallets can play a key role. A recent supply chain study reveals this:

“Overall, the study demonstrates that by improving environmental, social and governance (ESG) performance throughout their supply chains, companies can enhance processes, save costs, increase labor productivity, uncover product innovation, achieve market differentiation and have a significant impact on society.” – The State of Sustainability Supply Chains: Building Responsible and Resilient Supply Chains, EY & UN Global Comact.

When making improvements on the supply chain, it is important to note that using wood is good for the environment, despite some perceptions. In fact, every cubic meter of wood used as a substitute for other building materials reduces C02 emissions to the atmosphere by an average of 1.1 ton C02 (CEI-BOIS). If this is added to the 0.9 tons of CO2 stored in wood, each cubic meter of wood saves a total of 2 tons CO2. Based on these figures, a 10% increase in the percentage of wooden houses in Europe would produce sufficient CO2 savings to account for about 25% of the reductions prescribed by the Kyoto Protocol5.*

Illustrating that “wood is good,” as an industry we must continue to share with our partners facts such as:

According to the U.S. Forest Service, there were 119 percent more hardwood trees in 2007 than in 1953, with the growth-to-removal ratio of 2.00 (tow new trees for every one removed).

Each year, 1.7 billion trees are planted in the U.S., which is an average of 4.8 million seedlings each day.

Another point in supply chain development to be aware in building a reusable and recyclable supply chain using wooden pallets is that, according to McKinsey, 90% of a company’s impact on the environment comes from supply chains. Let’s look at the value pallets bring to the chain.

The wooden pallet life cycle is significant. In fact, we should be proud as an industry that 95% of them are recovered, refurnished and recycled. They become mulch, biofuel, animal bedding and more at the end of its long service life. According to the research by Virginia Tech and the USDA Forest Service, 508 million new pallets were manufactured in 2016. In the same year, 341 million pallets were recovered, out of which only 35.39 million wooden pallets were landfilled.

Are you familiar with Walmart’s Project Gigaton? Their sustainability pledge to remove a gigaton of CO2 emissions between now and 2030 is ambitious. In fact, it’s equivalent to taking 211 million passenger cars off the road in the U.S. for an entire year.

So, how do pallets stack up with that? As an industry, we have been proactive to design a carbon calculator that estimates for every 10 wooden pallets that are recycled, just under 1 car is taken off the road. The USDA estimates that 357 million pallets are recycled every year. So, the exact number of cars that would be taken off the road is more than 34.2 million. Simply put, pallets can do what Project Gigaton is aiming to do in 13 years … in eight.

Strong, Durable and Customizable Supply Chain

In conclusion, we would be remiss to point out the high standards and tools that are set and available in this industry. One tool to gauge any organization’s carbon footprint impact based on pallet usage is found at naturespackaging.org where supply chain partner companies can assess their organizational carbon footprint on pallet usage.

Also, it is important to note that both softwood and hardwood lumber are used in wooden pallets, which have been graded for structural performance and can be customized to specific sizes to for the end-product requirements. Lumber used to construct wood pallets is graded according to quality rules by the American Lumber Standards Committee, National Hardwood Lumber Association, and the Canadian Lumber Standards Accreditation Board, where grades are codified as to their performance and appearance characteristics.

As mentioned earlier, one of the biggest needs for the supply chain is having a pallet that’s truly customizable. With so many different products and shipment specifications out there, the standard 48x40 pallet is not a one-size-fits-all solution for the entire industry.

As the industry’s resource, we’ve developed proprietary software that helps pallet designers work directly with the supply chain to meet their very specific pallet needs. From a pallet’s specifications to its design, PDS is the resource that delivers the supply chain everything they need to implement the most sustainable option in the industry.

As we continue to focus on what’s most important to our supply chain partners – sustainability, reusability, recyclability, strength, durability and customization – I believe the solution is right in front of us. It’s humble, it’s ubiquitous, and it carries nearly every object through the supply chain. It’s up to us and you to make the business case to suppliers