Posted By 4dmin on Nov 23, 2016 5:40 PM
Businesses that rely on pallets to ship their goods during the holiday season may be in for some sticker shock.
Just as surely as Santa Claus travels by sleigh – soaring through the sky led by eight tiny reindeer – to deliver presents to every good girl and boy, pallet prices are higher during the holiday season.
The reason for the bump in pallet prices during the holiday season is as old as St. Nick himself – supply and demand. With pallets in high demand during the busy shopping season, businesses must either pay more for used wood pallets or buy more expensive new pallets to move their products across the country.
Pallet prices increase not only during the holidays, but anytime there is a huge spike in consumer demand. Since the holiday season can sometimes account for 40% or more of some business’ annual sales, it also tends to be the most expensive time to buy pallets.
Demand in the pallet market reflects the economy, since it serves as a yardstick for the volume of goods being traded.
Pallets are usually more expensive from September through January 1. Any time there is a slowdown in the economy on a local, regional or national scale, it results in reduced demand and slightly lower prices. Transporting pallets is expensive, so local and regional markets can be impacted by some transportation issues even though national markets are not.
Some of the current demand problems date back to 2009 when the pallet industry nose-dived with the economy. It put many pallet producers out of business. Even though the economy recovered, the pallet producing industry has yet to reach pre-2009 levels. As of today, there are fewer companies producing fewer quality pallets.
To understand the dynamics of pallet pricing, it is important to understand that it is related to pallet cores. Pallet cores are damaged or used 40×48 inch pallets still suitable for repair and reuse.
Pallet core supplies have been dwindling for years, and just like finished pallets, demand for cores is particularly high from September through the holidays.
During the early decades of the pallet recycling industry in the 1970s and 1980s, pallet core surpluses were available for free or at a relatively low cost. As a result, pallet recycling businesses were often very profitable.
In recent decades, increased competition has led to recyclers bidding competitively for large pallet core supplies, squeezing profit margins. Today, it is not uncommon for large generators of cores such as distribution centers to sell them. Thrifty recyclers can still count on a few places to find pallet cores, such as small businesses, construction sites, distribution centers, hotels, restaurants, ports, cruise ship terminals, manufacturing or processing plants, trucking terminals, landfills and recycling companies.
According to a survey from Modern Business, purchase price is the most important consideration for pallet purchase, cited by approximately 60% of respondents. Cost per use was in second place, cited by 37% of respondents. Other leading factors included strength, durability, customer requirements, reusability and availability.
Some alternative materials saw increases. The use of plastic pallets rose 4% and metal pallets was up 3%. These findings are consistent with other reports that note fewer pallets are being discarded each year. However, wood pallets still dominate product sales.
This year, 58% of respondents cited “compliance and cleanliness/safety” as the top reason they chose plastic pallets. Other reasons cited for plans to use more plastic pallets were because they were more sustainable than wood pallets and last longer.
The Modern Business survey also noted that many respondents said their plans to use metal pallets are increasing, with 4% of respondents saying they expected to start using metal pallets in the next 12 months. Of the respondents already using some metal pallets, 8% say they expect to increase metal pallet use.
Looking at trends in large retailer’s use of pallets, both Walmart and Costco have decided to phase out the use of stringer pallets in favor of block pallets. While stringer and block pallets may look similar, block pallets are more versatile when it comes to moving pallet loads around the warehouse. By design, block pallets have full four way entry while stringer pallets have only two way or partial four-way entry. Partial four-way entry means that a pallet can be handled from all four sides with a forklift but from only two sides with a pallet jack.
How this trend towards block pallets will impact future pricing models for both block and stringer pallets is uncertain.
Companies which have historically relied on used pallets that are now suffering from rising costs due to a pallet shortage do have a few alternative options.
It wasn’t that long ago that few people gave pallets a second thought. They were one of the costs of doing business and, since they weren’t that expensive, few people really looked at them as a significant business expense. They were just a platform for a warehouse product. Those days are long gone.
Although wood pallets are still taking the lion’s share of the market, now that companies have realized how much pallets can impact their bottom line, they are considering a variety of new materials, shapes and sizes.
With all that said, demand and supply basics have not changed. For the foreseeable future, pallet demand will be high and supply will be low during the holiday season. It will be important for businesses moving forward to be flexible as new technologies continue to change the pallet market. It will also be important to have a reliable vendor – like Direct Supply, Inc. – who will be viewed as part of the team.
Contact Direct Supply today to find out how we can help you manage your pallet inventory!
Posted By 4dmin on Nov 18, 2016 3:38 AM
Pallets are a key component to almost all businesses in one way or another. They are essential in the transportation and storage of most products. Chances are, you probably have a pallet or two leftover from a shipment laying around your corporate office.
Unfortunately, pallets don’t always age well. They get damaged or broken. If left outdoors, they may develop mold or rot. Perhaps you found that you no longer need as many pallets “on hand” as you once did or you need to replace broken ones with new ones. Whatever your reasons, pallet disposal is now on your mind, but you don’t know where to start.
Instead of tossing old pallets into the garbage or burning them in your fire pit, there are many other ways that you and your business can benefit from them. You know the old adage, “reduce, reuse and recycle.” This applies to pallets as well. You don’t have to throw them out. You can sell them or find another way to use them in your business. You already made the initial investment, don’t let that money go to waste.
You’re looking to reduce the number of pallets in your warehouse, or at least reduce the amount of damaged or broken ones. Damaged pallets can be hazardous and you definitely don’t want them sitting around when any clients or management come to visit. Rotting or moldy ones can present safety concerns for you and your employees.
Instead of taking the easy way out, look at reusing them or recycling them. Disposing of pallets by throwing them into the trash is just throwing away money.
There are many benefits to reusing or repairing your old pallets:
Did you have plans to reuse your old pallets but think they’re too damaged? Take a close look at the pallets you’re considering throwing out. There are probably a few of them that could be repaired. Depending on the extent of the damage, this will probably be more cost effective than buying a new pallet.
There are a few places that will repair your pallets for you (including Direct Supply, Inc.). You’ll need to contact the company directly to get a quote based on the extent of damage, but it’s definitely something worth looking into.
If you’re handy and you only have a handful of pallets laying around, you may also look into repairing them yourself, but this could be a large undertaking. eHow has a great article about how to do this. You would need full-length stringers, a box of two-inch screws, a screw motion machine tool, a claw hammer and standard pallet deck boards. There are different instructions to follow based on if you’re repairing the pallet stingers or the deck boards.
Pallets are great to use as shelving if you have a waiting area or even to use in your own office. Shelves can either be self-standing or you can hang them on the wall. Make sure to clean them up first. It’s a good idea to sand them down to smooth them out before applying any stain or paint. These could really spruce up your business space and are highly effective for holding a multitude of books or other objects.
If you have a waiting area in your business, you can turn your old pallets into a coffee table or two to fit in this space. Not only can it be a nod to what your business does, but it will also serve a practical purpose. Coffee tables or end tables are necessary if you have a waiting room, so why not save some money and use something that you already have on hand? You can prepare the table similarly to the way that you would make pallet shelves, by sanding the pallets down and then either staining or painting them, depending on what else is in your space.
A photo posted by Anthony Farinella (@directsupply1) on
Rather than buying expensive frames for the artwork in your office, why not use pieces of your worn out pallets? All you need to do is dismantle it, cut the wooden slats to the needed size and reattach the slats together. Artwork adds a great deal to either your business’s waiting room or your office. It brightens up the space and you can frame it without all of the cost that is usually involved in having a service do it for you.
Another great piece for your waiting room is a coat rack. This offers a great way for people to hang their coats as they come into your office. Again, instead of buying something new, you can use something old and refinish it.
There are places out there that will buy back used pallets, depending on the condition they are in. This is a great opportunity to get some of your company’s money back and give new life to these pallets.
You may be able to sell your pallets directly to local manufacturers that need wood pallets. You can simply call them on the phone or see them in person and find out if they are interested. The benefit to them would be that they would be saving money by buying used pallets to recondition that they’d be able to resell to their customers.
This information will help Direct Supply give an estimate of how much those pallets are worth and what price will be fair for them.
If your company is located in our service area, Direct Supply offers a dropped trailer program. We will drop a trailer at your business and you can load the pallets into the trailer for delivery to Direct Supply. By coming to you, we make it even easier for you to get rid of those extra pallets!
The North American Pallet Recycling Network is a great place and an easy way to sell pallets. This will help you find a pallet broker near you as there is a recycling exchange for every state. You can list pallets you have for sale and sell them to the buyer that offers you the best deal.
The National Wooden Pallet and Container Association is another great place to sell pallets. You are able to search by ZIP code to find businesses near you.
Recycle.net’s Pallet Exchange Listings: Here you are able to search locally for people wanting to buy pallets. You could use all three of these linked resources in order to branch further out and reach more people. You may find something on one that isn’t on another!
Another idea is either selling or giving them directly to woodworking and furniture schools. These places can always use more materials and this could be a great way to give back to the community.
This number can vary greatly depending on the condition as well as the size of the pallets that you’re looking to sell. Prices will also differ based on your location (they tend to vary from state-to-state). This can be anywhere from $0.50 or $2.50 to $4.00 per pallet. You should contact a few places to get quotes to make sure you’re getting a fair price for what you want to sell.
If the repairs are minor, many pallet processing companies will repair them and sell them back into the market. They are able to do this at a significant discount compared to the new pallets so they make money on it as well.
The pallets that are further damaged are usually shredded. Any nails or staples are separated out of the wood using a magnet. All parts of the pallet can be reused. Even these metal pieces don’t go to waste. They are sent to a metal recycler. The shredded pallets can be turned into wood chips or possibly used in remanufactured pallets. They also may be used in mulch, particle board or animal bedding.
The majority of this article focused on wooden pallets, but there are some places that use plastic instead. Many companies do use plastic pallets and there are some benefits in using plastic over wood. Plastic pallets are easier to clean as well as sanitize. Because they do not absorb moisture, they will also not rot or grow mildew like wooden pallets will, depending on the conditions that they are stored in. Initially when plastic pallets came into the market, there was no one to repair them. That is not the case any longer.
When it comes to recycling plastic pallets, it is done pretty much in the same manner as recycling wooden pallets. They are also shredded and then sold to plastic recyclers. Some of the places that recycle wooden pallets may also recycle plastic pallets.
Even though throwing them away seems to be the easy answer, as shown above, there are many other options. Of the ones that are thrown away, there is about one-quarter of them that are recovered for recycling.
The pallet recycling industry has become even more effective throughout the years. For example, in 1992, 51 million pallets were recovered. Compare that to 2011, where the number grew to 474 million. That is a huge number of pallets that these companies could have sold or otherwise used instead of just throwing them away!
68.5% of the recovered pallets were able to be repaired and reused, while 11.9% of them were reusable without repair. Just imagine what these companies could have gotten out of them! 16.2% were dismantled and used as repair lumber or in the construction of new pallets. 3.1% were chipped or ground for different uses and the last 0.3% were used for other purposes.
If you look at the 3.1% that are chipped or ground, 55% is used for both colored and uncolored mulch, 10% for animal bedding, 30% for waste to energy products and the last 6% is for other uses.
These companies missed a great opportunity by simply throwing out their pallets. The number of those pallets that could have been reused is staggering. Don’t let the easy way out prevent you from taking full advantage of your used pallets. You’ve already paid for them. Why not keep them working for you?