## Thursday, June 17, 2010

### Plastic, Plywood, Pine and Paper Pallets

Continuing this week's pallet theme, I took another stroll in the warehouse. Because we ship books, we must have strong and heavy pallets to carry those loads. All our pallets are made in the USA to GMA standard sizes.

One of our warehouse tenants deals with much lighter products than we do. Theirs are imported from Asia in international packaging. Their wild assortment of pallets include examples made of plastic, plywood, pine and paper.

Here is a plywood pallet. Unlike the solid beams of wood used in our pallets, this uses squares of plywood, stacked in 9 places, with strips of plywood connecting them.

There are some advantages to plastic pallets. They don't soak up water, nails don't fall out, and they use recycled material. But they can cost 5-10 times as much as wood. If they get damaged, they can't be easily repaired. Here's a pallet showing an injury where the forklift missed the slot - one more hit and the pallet corner might collapse.

There's another sort of wood pallet on their side of the warehouse. It's a much lighter construction than we buy. Notice how thin the boards are? These are soft woods, like pine, instead of the hard woods used in heavier pallets.

Pallets can always be built lighter and cheaper - for example, this paper (cardboard) one!

Both weight and price are important, especially weight. It's true that a pallet spends much of its time sitting still, but the very reason for a pallet's existence is to make movement easier. You could think of it as "an envelope" for large goods. A lighter load will be less expensive to ship.

Q1. A plastic pallet weighs 16 lbs. Our wood pallets weigh 36 lbs. What would be the difference in total weight if we ship 1200 pallet loads a year?

A1. 36 - 16 = 20 x 1200 = 24,000 lbs difference in total weight.

Q2. We calculated that we spend about \$.20 per pound to ship pallets (and books) around the West Coast. How much could we save in a year if we changed to plastic pallets?

A2. 1200 x 20 = 24,000 lbs x .20 = \$800

Q3. How much would 1200 used plastic pallets cost?

A3. 1200 x \$20 approx = \$24,000

Q4. Since we only use a pallet once (they don't come back), we would pay \$20 instead of \$3.25 for a pallet, while saving \$4 in shipping cost. Would this be a good management decision?

A4. NO!