Interpal VII, held this September in Philadelphia, was the seventh international pallet meeting in the Interpal series. These meetings have been held every three or four years since Interpal I in Hamburg, Germany back in 1985. This was the second Interpal to be sponsored by the National Wooden Pallet and Container Association. Two have been sponsored by the Canadian Wood Pallet and Container Association, and three by European pallet associations. The next one is likely to be held in Europe.

            Why hold an international pallet meeting in an industry where so many pallet companies operate within a relatively small radius of their plants?  The answer lies in the changing business climate where many problems faced by our industry tend to be global in scope. These issues are addressed by a united front. Years ago, pallet company owners were often content to focus on manufacturing advancements, particularly machinery. Now, many issues that challenge us are much broader thanks to globalization. You never know when the pallet you produce is going to make a trip around the globe.

            The pallet industry serves society globally as well as in your backyard. We need to have a united effort and collective voice. Thus, it is natural for industry leaders to see the value in gathering with pallet people from across the oceans.

            We arrived, excited with anticipation from past Interpals, but concerned about projected low attendance due to the global economic downturn. While economic conditions are difficult in North America, they are even worse in many parts of the world, including Europe. One of the biggest benefits from any pallet meeting is the networking opportunity.

            Interpal VII was no exception even though a total crowd of fewer than 150 was somewhat disappointing. In spite of efforts to appeal to pallet people from around the world, international attendance was sparse. The biggest historical attendance was between 500 and 600 at Interpal II in Ottawa in 1988, but a more typical meeting was drawn between 200 and about 350 people.

            I have been blessed to attend all seven Interpals. Few industry members have attended all of these international events.

            OK, so what are these issues that have such a far reaching international impact? I will cover a few of the major things discussed at Interpal VII and pass along some of my personal Interpal observations.

The Global Economy

            The meeting opened with a presentation on a global economic forecast. Gilda Cabauatan Fernandez of the International Monetary Fund indicated that the U.S. housing market along with the subprime financing and global leveraging were the real problems, not just in the United States but globally. She stated, “We are no longer at the brink of universal financial collapse. Financial conditions are starting to stabilize.”

            The economy is still sluggish, and unemployment keeps edging higher. Some emerging markets continue to be in trouble. Asia is leading the way out of the recession. She indicated that higher inflation is not a risk; I hope she is correct on this point. There are worries about sustainability of the rising public debt, and government debt seems destined to increase. There is a huge concern about the sustainability of public debt and its persistent rise.

Timber Supplies

            Joseph Buongiorno of the University of Wisconsin made a presentation about worldwide timber availability. Worldwide, there has been some strong growth in wood fiber demand, including the growing wood pellet market. Pellet supplies are tight and pellet prices are going higher. As a local example, two pallet companies in my home state of Virginia have recently built new pellet plants in response to this evolving market. A high demand growth in Asia has been complemented by wood supplies from Latin America, North America, and Russia.

            There is growth in recycled wood fiber markets. Joseph believes that biofuels will have a bigger impact as these markets develop further and move more toward maturity. Do not be surprised if biofuels become much more significant in tomorrow’s market than they are today. I believe wood fiber markets have a promising future.

Non-Government Organizations

            A panel discussion on the impact of non-government organizations included input by Bruce Scholnick of the NWPCA, John Dye of Scotland, and Gunilla Beyer of Sweden. They discussed the impacts that associations have had, such as the NWPCA’s involvement in the warehouse fire problem. The NWPCA organized a resistance effort to combat potential changes in the way fire marshals view wooden versus plastic pallets in warehouse environments. Fire fighting efforts should be concerned with any impact that pallets have on spreading fires, but they need to look at the truth, not the hype from one side of the issue. The NWPCA stepped in and presented an organized front to stand up for the interests of the wood pallet industry on this issue.

            The current and future role of Web sites was discussed. Certainly, the Pallet Enterprise staff is working to expand our electronic and digital services.

Pallet Treatment Standards

            One of the best presentations was a four person panel that discussed the global challenge of invasive species. The speakers included David Kaplan of U.S. Animal & Plant Health Inspection Service, Alphonsus Ceelaert of the European pallet association FEFPEB, Rod Scott from Australia, and Frank Lowenstein of the Nature Conservancy. In the United States, one of the most pressing issues is certainly the proposed possibility of expanding the ISPM-15 international pallet treatment standard to mandatory domestic treating. Four public meetings have been held on this issue. There is no doubt that phytosanitary issues are global, not just local. Pallets have been under the microscope, and our industry is striving to become part of the solution. But firewood infestation issues are mostly unresolved.

            One observation from this fairly active discussion was that some phytosanitary questions are not easily answered. Even people who are deeply involved with this issue sometimes do not have answers to questions that are a little bit on the fringe and out of the main stream. Panel answers tended to support the concept of domestic treatment. The international heat treating program is generally considered to have been effective. This positive result is leading countries to consider domestic requirements based on the ISPM-15 standard.

Pallet Design System

            While the Pallet Design System (PDS) is not a new concept, it is indicative of advanced technology in the pallet industry. John McLeod gave a talk on PDS in its 25th year; this pallet design program continues to have international acceptance and respect. The NWPCA is planning to take PDS from just a pallet design tool to a unit load design tool. They expect to integrate stresses on crushing and compression in future developments.

Biofuels & Pallet Treatment Technology

            Drs. Judd Michael and Chuck Ray from Penn State University made power point presentations on biofuels, including wood pellets, and possible advancements in pallet treatment options, including dielectric and microwave technology. Chuck said that radio frequency technology is targeted to possibly replace methyl bromide treating. Three Penn State researchers make up a life cycle analysis team that will compare methyl bromide, heat treating, microwaves, and radio frequency technologies. Much is to be resolved in this area, but their research could have strong implications for the future.

            While the future of wood pellets was discussed as an option for pallet people, biomass is a much bigger issue than just pellets. Despite widespread global availability, the most common biomass markets are changing. Pulpwood may grow internationally, but it seems to be decreasing in the United States. Almost in passing, they mentioned that sand may serve as a substitute for animal bedding in the future. Keep in mind, however, that wood fibers offer fantastic environmental benefits as fuel. It is interesting that after serving one life as a wood product, wood fibers can then be recycled into biofuels alternatives.

Pallet Industry Management Program

            Many attendees want to know about the current progress in developing a cooperative pallet management program in the United States. About a year ago, industry leaders proposed the development of the Pallet Industry Management Program (PIMS).  In addition to being of interest in North America, a successful PIMS program would certainly be of interest in the international pallet community. The PIMS program has studied the Europallet system as a guide.

            Steve Geiges gave an update on PIMS. Certainly, one of the biggest problems is how to wrap your arms around the difficulty of getting a five thousand person entrepreneurial, competitive industry, like the pallet industry, to cooperate in a competitive pallet pool.

            The intent of PIMS organizers is to develop an independent, non-profit company that will manage a new white wood block pallet pool. Steve indicates that they are working on financing options that will utilize financial resources from outside of the pallet industry. The people working on the PIMS concept are probably aware that past efforts to organize pallet systems and interface with different industries have typically failed. A major reason for past failures is that pallet users did not put enough economic support behind those efforts. Look for more complete coverage on the PIMS program as soon as the details become available.

Manufacturing Change and the Pallet Industry

            The shift in manufacturing toward eastern Asia has products moving longer distances than occurred in the past. Because floor loading is predominant in Asia, this has not typically increased palletization, particularly in Asia, but that could change down the road. While the pallet industry is mature in North America and Europe, it is in varying stages of maturity and development in most other parts of the world.

            Yes, the pallet world is changing more today than ever before. The world is shrinking. I once thought that the relatively high weight to value ratio of a pallet would keep its manufacturing and repairing on a somewhat local basis. While that may continue to be relatively true, pallets move globally and they have to be managed globally. Smart pallet company owners and managers will keep these global forces in mind as they prepare for the future.          

            Do you want to know what the future of our industry is? It is not simply in manufacturing and repairing pallets, although that will always be a piece of the puzzle. Pallets and transport packaging are truly service businesses, and service goes way beyond just delivering a product at the drop of a hat. It means assisting customers in managing their product flows, including the pallets that serve as a shipping and warehousing base.