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International Commerce Impacts U.S. Pallet Demand
Highlights from 2004 Articles

By Chaille Brindley and Rick LeBlanc
Date Posted: 1/3/2005

In the past, most goods that have been imported into the U.S. have not been palletized. In many parts of the world, the cost for paying labor to floor load the product is virtually nothing. Without the pallets, the product manufacturer can get even more product in each container, which reduces the shipping cost per item. With international shipping rates starting to go up, saving space has become even more of a priority over the past year. All the international regulations impacting wood packaging due to phytosanitary concerns also provide another reason why some importers might find it advantageous to floor load items.

            As companies use new measurement techniques, such as Six Sigma, that look at the entire supply chain, more international shipments may get palletized at the point of manufacture. If major retailers and distributors push the suppliers, they will likely comply, which would reduce domestic demand for new and used pallets.

            It really all comes down to the freight savings versus the higher domestic pallet and labor costs of palletization. Which is more expensive to the total supply chain? If a container of electronics comes into San Francisco and is offloaded onto pallets by dock workers earning $35 per hour, then the space savings may not make much of a difference. If the container is unloaded at a distribution center, the labor cost associated with palletization may be much less than if it is done at a port by a longshoreman.

            "Only a small percentage of the total shipping space is taken up by the pallet, and the cost savings of the labor and material on the other end is huge," said David Mezzanotte, President CHEP USA. "CHEP has been doing some importing into the U.S. on CHEP pallets from Asia for some time. It just hasnít been a huge volume. But I think that volume is going to pick up significantly."

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