Pallets are not only essential to the shipping and logistical aspects of many facilities’ operations, but they could also be the key to unlocking long-term sustainability and environmental, social, and governance efforts for many distributors.
By Taylor Janecek
From groceries to clothing purchased in stores, there is a good chance that the products you buy made their way to you via a program key to keeping the supply chain—and the world—moving: pallet management.
Used to store, stack, and transport materials, pallets are not only essential to the shipping and logistical aspects of many facilities’ operations, but they are also a valuable commodity in the recycling industry and could be the key to unlocking long-term sustainability and environmental, social, and governance (ESG) efforts for many distributors.
Photos are from iStock, provided by Waste Harmonics.
transport and distribution.
Examining Environmental Impact
Pallets typically consist of different materials, including standard white wood, plastic, or metal. There is a common misconception that the purchasing of wooden pallets contributes to deforestation or other environmentally harmful practices in some way. However, that depiction of the pallet industry is far from accurate.
In fact, most of the wood used for pallet manufacturing is leftover lumber from other manufacturers, including furniture builders and other producers. So, far from relying on cutting down trees, this process avoids unnecessary wood waste by turning leftover lumber into pallets.
Wooden pallets are the best bet if you are looking for a holistic pallet management program. Plastic pallets may seem like the more durable option at the outset, but the recycling space for plastic pallets is underdeveloped when compared to wooden pallet recycling. Plastic pallets will also present more challenges to reaching sustainability and ESG goals due to increased recycling costs and limited biodegradable byproduct options once they have reached an unusable state.
Once a wooden pallet has served its purpose in the market, depending on its physical condition, it may be possible to continue its environmentally conscious cycle through repair and reuse. In general, around 95 percent of all wooden pallets across the U.S. can be recycled up to 15 times before they reach an end-of-use state. As a bonus, the energy-efficient method used to maintain a pallet’s wooden structure (as opposed to reprocessing moderately damaged pallets into press board or paper products) preserves its ability to process carbon, lessening harmful emissions.
Once a wooden pallet has reached an end-of-use state, it can become a different product that serves a new or unique purpose in the marketplace. Wooden pallets are truly a zero-waste commodity, in the sense that once a pallet is broken down into its most basic form by a recycler—while still processing carbon—the byproduct becomes biodegradable as mulch or animal bedding; it can even be converted into biofuel.
A streamlined wooden pallet management program improves your “green” bottom line in more ways than one by offsetting program costs and enacting sustainable business practices through recycling along the way.
Most recycled wooden pallets will generate a substantial rebate (a type of credit or contractual rate that can be brokered for certain materials in the economic lifecycle). While dependent on the integrity of the pallet, as well as economic factors and location, pallet structures that can easily be broken down into their individual components will generally return a higher rebate, since they can be used to repair other pallets. Essentially, the lower the labor costs, the better the chance of receiving a higher rebate for a wooden pallet. Staying attuned to indexes and global export market trends will help establish what the value is for certain commodities and materials per ton, including wooden pallets.
Market Outlook and Program Performance
The pallet management market has seen its fair share of ups and downs over the past five years, as we have grappled with the phenomenon of “rapid normalization” post-pandemic. During the peak of the COVID pandemic, there was a noticeable surge in the demand for wooden pallets, significantly impacting their purchasing patterns. Pallets played a crucial role in the swift restocking of essential supplies on store shelves and the urgent shipping of products. Some customers who typically ordered a fixed number of pallets began doubling or even tripling their orders, while others sought out broken pallets for repair and resale at higher prices due to soaring demand. This unprecedented surge in demand was unlike anything the industry had ever seen over the past decade.
Fast-forward to late 2022 and early 2023, when consumer and economic behaviors changed. People were no longer rushing to stores to stock their shelves, and many started to spend more cautiously than they had been. These shifts in behaviors trickled into the pallet market. Many purchasers scaled back on expenditures to acquire pallets, slowing activity in the market overall. Market consolidation also played a significant role, with larger, nationwide players driving the market and forcing smaller, local providers to stay competitive while prices plummeted by around 60 percent.
Now, in 2024, not much has changed; we are still experiencing the other side of the downward cycle. We may see supply and demand patterns begin to shift or improve heading into the latter half of 2024, especially during an election cycle where economic conditions can dictate indexing activity in the marketplace. Optimistic outlook aside, managed waste services providers can help support or predict market conditions, when possible, simply by looking at pricing models and market data consistently to ensure pallet program costs are fair to market and to prepare for any continued economic ups and downs.
The key is securing alignment with a network provider who can match level of service to pallet volume while ensuring that pallets are recycled in a timely fashion. If you are the type of organization that is actively purchasing pallets, you can leverage your purchases and your recyclables together, ensuring optimal frequency and rates for pickup services and rebates. Partnering with a provider who can handle both sides of the transaction creates a cyclical economy and ensures that the purchase price and rebates received for outbound services are equal and support one another.
Amid economic uncertainty, do not overlook the pallet management and recycling industry’s sustainability potential. The fact that pallet activity is cyclical—pallets that move through a program or distribution center will eventually spit back out into the market to be reused, resold, or repurposed—is a bright spot in terms of recycling.
When working toward sustainability or ESG goals, there are many straightforward ways to track pallet information and progress in real time. Pallet rental programs typically have their own sustainability tracking in place, and many nationwide pallet partners assume responsibility for reporting out on the number of pallets received by type of material.
For distributors who do not have a direct relationship with a rental company, it may be worthwhile to work with manufacturers to understand possibilities and differences between pallet materials and rental programs. Set standards by appointing someone to be responsible for understanding the flow of pallets through your organization and the dynamics of the types of pallets being received. This strategy will support further assessment and regulation of resources for improved ESG visibility. And remember, if it all seems like too much, a managed waste service provider can help in this space through transparent access to customer portals and consultation on rebates or program adjustments based on shifting economic tides or rollout of new recycling regulations across the country.
Ultimately, it is important have a reliable partner to address your goals and to provide the knowledge and flexibility required to make big decisions about your pallet recycling program when market conditions start to move in a positive direction again. Providers with proven experience in this area will be able to stay abreast of localized trends, conversations about sustainability at the federal level, pallet inventory and export patterns over time, as well as track progress and activity across the tight-knit pallet recycling network.
While no one has a crystal ball for what the future of the industry will look like, the best thing to do is stay educated and informed … and recycle your wooden pallets. | WA
As Director of Pallet Management, Taylor Janecek oversees the standardization and expansion of the pallet recycling program at Waste Harmonics and Keter Environmental Services. Taylor identifies opportunities to enhance pallet recycling practices and efficiencies across the company’s portfolio, leveraging industry-leading customer service to bring awareness and growth of the pallet recycling program to customers. Previously, Taylor was employed at 48Forty Solutions (formerly Prime360 and Northwest Pallet Services) as Director of Supply Chain Operations.
Based in Victor, NY, Waste Harmonics is a unique, technology-enabled managed service provider in the waste industry. The company manages waste contracts and third-party vendors, and ultimately, helps customers with what every business generates: waste. Waste Harmonics creates customized, technology-driven program solutions that address waste generator expectations and requirements, dealing with single-source management of service suppliers, quality of service, reduction of costs, data and reporting analytics, consolidated invoicing, and landfill diversion. Waste Harmonics works with diverse business clients across North America to deliver cost savings, consolidation of invoicing and communications, and recycling and sustainability strategies. For more information, call (585) 924-9640, e-mail [email protected] or visit wasteharmonics.com.
Keter Environmental Services is a data-first recycling and waste management company that provides first-class sustainable recycling and waste programs nationwide. Keter works with forward-thinking companies who understand that increasing landfill diversion rates, improving operational efficiency, and using technology for data and reporting are crucial to an effective and sustainable business strategy. Keter approaches every opportunity with the knowledge that each company they work with is unique in its waste streams, needs, goals, and challenges. For more information, visit www.Keteres.com.