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Pallet Recycling Enables Roofing Maker To Deliver Superior Value to Customers
J-I-T Delivery by NEPA Pallet & Container Provides Solution for Export Pallets

By Rick LeBlanc
Date Posted: 2/3/2004

Looking for ideas how to keep expendable pallet pricing competitive while providing a solution to pallet disposal concerns further down the supply chain from your customer?

            A good model to investigate is the collaborative pallet recycling program developed by PABCO Roofing Products, a manufacturer of high quality asphalt shingle products in Tacoma, Wash.

            The pallet program is a winning combination of pallet quality, competitive pricing and service to keep PABCO’s customer sites clear of surplus pallets. It is an example of how a traditional expendable pallet application, like many in the building products sector, can be redesigned with the support of customers and pallet suppliers for a more efficient, cost-effective pallet solution.

            PABCO Roofing was acquired by Pacific Coast Building Products in 1984. Today it remains within the Pacific Coast Building Products family of companies, producing laminated and three-tab shingle lines for sale to roofing and building supply businesses in the Western U.S. The roofing manufacturer also exports its products to Canada, Asia and New Zealand. (Export phytosanitary requirements for wood pallets impacted pallet selection, which is also discussed below.)

            PABCO shingles are packaged in bundles of plastic and automatically palletized on wooden pallets. The palletizing process puts four bundles of shingles in each layer, with 14-15 layers per pallet, explained Terry Roth, PABCO’s office manager. Each pallet carries about 4,000 pounds of shingles, and they typically are double-stacked after cooling. Pallets are moved by a conveyor system and forklifts. “Pallets must be constructed to withstand the weight, move smoothly over the conveyor rollers, facilitate forklift loading and protect the product,” Terry noted.

            Pallets are constructed to PABCO specifications, which call for a 39x53, four-stringer design and made of all hemlock-fir lumber. The roofing pallets are two-way, double deck, double wing and non-reversible. Stringers are 2x3. The top deck is nearly solid with gaps between the deckboards of 7/16-inch or less while gaps between the bottom deckboards are 2 7/16 inches. The bottom deck must have sufficient wood surface to promote smooth movement over the roll conveyor.

            “Most pallets are engineered to withstand certain weight pressures, so we have to adhere to them,” Terry observed. “You are going to have 14 or 15 layers of shingles bearing down on the top deck, and if you have too wide of a gap, you are going to put a groove in the shingle because they are still pretty warm when they are put on the pallet.” The four stringers and wing design reduce deckboard span to provide the support needed for the heavy load.

            PABCO buys both new and used pallets from its pallet suppliers. The company issues monthly purchase orders for pallets in truckload quantities. PABCO personnel inspect every shipment of pallets for quality, looking at deckboard gaps and thickness, protruding nails, overhanging boards and stacking. The company does not accept sloppy loads and low quality pallets. New and used pallets must meet the same specifications. PABCO’s pallet vendors often keep a truckload of inventory on hand in case of emergencies.

            “Our primary vendors also provide the kiln-treated, ‘bug-free’ pallets needed for exporting shingles,” Terry said.

            Roofing pallets that cannot be refurbished are recycled by pallet suppliers or ground into hog fuel.

            “Used pallets are never returned by PABCO customers,” Terry said. Instead, PABCO encourages pallet suppliers to retrieve used pallets from its customers and recycle them; pallets that can be refurbished to meet PABCO specifications are repaired and resold to the shingle manufacturer.

            PABCO has been using recycled pallets for several years and is striving to improve and increase recovery of its roofing pallets. Used pallets make up 15%-20% of the 10,000 pallets that PABCO requires per month. Most used roofing pallets are recovered from western Washington and the Portland, Ore. area, although truckloads are retrieved from as far away as Boise, Idaho.

            With permission from its customers, PABCO furnishes their names and contact information to its pallet suppliers. Taking this step only with approval from its customers helps avoid undesired contact with recyclers. Pallet suppliers contact the consenting customers and arrange to buy the used pallet cores. “It seems to work out well,” said Terry. “The customers seem to appreciate it, and the pallet vendors can afford to do it. It is just a good public relations thing all around.”

            Fife Pallet Recycling is one of several pallet suppliers that do business with PABCO.  “PABCO Roofing Products employs a strategic recycling program that affords local pallet recycling companies the opportunity to acquire and re-sell PABCO’s pallets back to them,” said Fife sales manager Dan Miller Jr. “PABCO encourages this practice by providing vendor lists complete with point of contact and phone numbers. These efforts have produced a very successful retrieval system for the recyclers.”

            Typically, according to Dan, a roofing or building products distributor or wholesaler has several business sites, including a central location where used PABCO pallets are accumulated. After a truckload has been collected, the distributor notifies the recycler, which picks them up. At the pallet recycler’s facility, the pallets are sorted and graded. Fife sorts them into three categories, Dan explained: good pallets, pallets that need deckboard repairs, and pallets that need a stringer replaced.

            Fife uses a Smetco bandsaw dismantler and a Rogers 54B dismantler to remove damaged stringers. “If the damaged stringer is one of the outside stringers, it is simply removed by using the bandsaw dismantler,” Dan said. “If the damaged stringer is internal, the Rogers 54B is a more efficient option.” Prepped pallets are transferred to a work station and repaired. Pallets refurbished to PABCO’s specification are put into inventory for eventual sale and delivery.

            Terry recently contacted Dan to ask if Fife could help a customer in a rural area with surplus pallets. The result was a ‘win-win’ for PABCO’s customer and Fife.

            “By selling their PABCO pallets to Fife Pallet Recycling, they no longer had the unsavory expense of disposing of the pallets, thereby creating a revenue stream,” Dan said. “The synergies between PABCO, Fife Pallet Recycling and PABCO’s vendors have proven successful for many years.”

            Terry emphasized the importance of having a good rapport with vendors, including pallet suppliers, including Fife and NEPA Pallet and Container Co. “We have really good relationships with all of our pallet suppliers,” he said.

            While PABCO’s reusable pallet program has been up and running for a number of years, changes have been made to the pallet footprint as well as to meet phytosanitary requirements for export. The pallet footprint was reduced to 39x53 from the original 40x54 design. The footprint was modified to eliminate pallet underhang and the associated threat of the exposed pallet deck damaging the pallet wrap of adjoining unit loads during fork lift handling. The transition to the smaller footprint was smooth, involving only minor modifications to automated material handling equipment. Pallet recyclers were given a few months lead time in order to coordinate the conversion.

            As far as pallets for export shipments, Terry still occasionally runs into problems even though he has been buying hardwood pallets and, more recently, heat-treated softwood pallets.  “These (export pallets) are bug free,” Terry said. “But when they are delivered and sit here, airborne bugs can land on them.”

            “Basically, we try to keep inventory down to a couple hundred at a time,” Terry added. “When we buy pallets now, most of them are from NEPA.” NEPA has pallet heat-treating equipment and, with its close proximity, can deliver export pallets to PABCO on very short notice. That kind of capability from a pallet supplier reduces the need to store a truckload of export pallets, which might come into contact with insects.

            When asked if he had considered other potential pallet strategies, such as pallet rental or alternative materials, Terry noted that PABCO has considered a variety of alternative material pallets in the past. However, they were all rejected because of cost or performance issues.

            It is hard to argue with success. Pallet costs have declined about 18% over the last five years -- thanks to the recycling initiative, lumber availability and competition among suppliers.

            “We work with our pallet suppliers,” Terry emphasized. “They have their own problems.  If they have to come in a day early or a day late, we try to accommodate them. And if we have a problem, we can call them on short notice, and they’ll say, ‘Sure, we’ve got 800 pallets made up for just such an emergency.’”

            With the help of high quality new pallet manufacturers and pallet recyclers alike, PABCO Roofing Products has hooked onto an effective approach to reducing pallet costs while providing a solution for customers faced with disposing of surplus pallets. It is an example of the collaborative supply chain approach much popularized by contemporary business thinkers and writers as a necessity but not often practiced.  By working together, pallet companies, manufacturing businesses and their customers can help deliver a superior, sustainable pallet solution.

            (Editor’s Note: Do you know of a customer that would provide a positive case study for the pallet industry? If so, please contact Rick LeBlanc at (604) 541-2958 or e-mail at rickleblanc@shaw.ca.)


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