A Word from the General Manager - March 2015

March 1, 2015

What’s On the Radar Screen 

Brian Isard

Sitting in this chair, I get a wide variety of calls about market conditions for the wood packaging industry.

A couple of weeks ago, one of our association members called me to ask if I had ever heard of a company called Perfect Pallet. This company had made a convincing sales pitch to one of his customers on using a returnable plastic pallet, resulting in the loss of a sizeable order of new pallets he has been receiving each year.

This week our sister association in England notified me that a RM2 a Canadian manufacturer of a plastic composite pallet had secured a firm order from US based glass company PPG Industries for potential use of 250,000 pallets.

Who are these new competitors and what do we know about them ?

Perfect Pallet is a US based company who has recently started business in Canada providing plastic returnable pallets to commercial printers for delivering inserts and supplements to newspapers. They claim that their network “will eliminate 100 million pounds of wood waste from entering newspaper facilities in 2015.” https://perfectpallets.com/ 

RM2 –  this Canadian based manufacturer of plastic composite pallets operates in both North America and Europe. They have a 250,000 square foot facility in Woodbridge Ontario. http://www.rm2.com/main.php

Over the past decade we have seen the plastic pallet industry make several attempts to penetrate the global pallet market. There have been some notable attempts to launch a plastic pallet such as iGPS that ended up with the company in bankruptcy in 2013. But there have been some noticeable successes as well, with products such as the Orbis Retail Display Pallets used at many Canadian grocery distributors for store order assembly. 

One of the most recognized companies specializing in industry analytics recently noted the potential for growth in plastic pallets:

Worldwide sales of pallets are projected to climb nearly five percent per annum through 2017 in unit terms. A pickup in manufacturing activity will spur across-the-board gains, especially in large, mature regional markets like North America and Western Europe. Demand in value terms will grow seven percent per annum, stimulated by overall increases in unit sales, as well as by a shift in the product mix toward higher-priced plastic pallets.” (Source: Fredonia Group Feb.2014) 

Based on my observations, plastic pallets manufacturers look for industries with a set of prior conditions to market their product to:

  1. An industry with a standardized pallet size and reliance on automated pallet handling equipment which require high quality pallets to run efficiently, both conditions which exist in the printing and glass industries.
  2. Industries that are finding it difficult to procure wood pallets because of tightening supplies and the rising prices of and demand for lumber.
  3. Closed loop distribution systems which make recovery of the plastic pallets in full load or on a LTL  basis more cost effective and reduce the risk of asset loss.
  4. Industries that are looking for more “sustainable” options than what their current pallet programs are offering.

The lumber and wood products industries have been under a sustained effort by producers of alternative materials for the past several years have been developing comparative studies to show that wood fiber based products are less environmentally sound than plastic material. 

As an industry we need to pay attention to how these pallets made of alternative materials are marketed because the industries that are using wood pallets are certainly paying attention to them.

In order to convince large pallet users of the potential environmental benefits of the plastic pallet compared to a wood pallet, companies are commissioning an independent , comparative analysis of the two pallet types using Life Cycle Assessment (LCA) and Environmental Product Declarations (EPD). 

The Life Cycle Assessment study evaluates inputs such as energy and material, outputs such as waste emissions, and the potential environmental impacts using ISO14040/14040 standards.

One thing I wanted to draw your attention to. The company that recently prepared the LCA for one of these plastic pallet companies is Pure Strategies http://www.purestrategies.com/ who is also a well-known consultancy company in the US. They provide effective strategies around product sustainability. They have been very successful in using sustainability strategies to drive change within supply chains of large North American retailers.

Product sustainability is rapidly becoming a force in our marketplace just as demands for greater supply chain efficiency, standardization, and the provision of unit load integrity were serious market forces over the past three decades.

As an industry we need to meet these new market challenges and in the months to come we will outline the plans your association has  been working on for the past year to better equip us for the future. Stay tuned next month for more information on our Nature’s Packaging initiative. 

PO Box 280 ,Carleton Place, ON, K7C 3P4
T. 613.521.6468 or 1.877.224.3555 F. 866.375.1835
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