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Letter from Ed: Pallet Industry Remains Dynamic – Excitement Comes Center Stage
The recent NWPCA annual meeting was abuzz with anticipation concerning issues of interest to our industry. Dr. Brindley shared a historic pallet meeting comparison with the now famous Memphis meeting in the 1990s.

By Edward C. Brindley
Date Posted: 4/1/2011

            I recently returned from the NWPCA’s Annual Leadership Conference. Very few people in the industry match me with as many years of experience attending pallet industry functions. Getting older does have some benefits when it comes to industry perspectives.

            Change comes fast and furious these days. The level of excitement was significant at this year’s meeting. The Pallet Industry Management System (PIMS) was definitely on the minds of many attendees. It made me think of the now famous Memphis meeting in the 1990s where excitement ran so deep that I saw people standing on tables and shouting out about the dangers facing our industry.

            What dangers? CHEP! This happened in the early days of CHEP, and people were more than concerned about what CHEP might mean to our industry down the road. We have now traveled much of that road. Excitement and concern over pallet rental and its impact on the GMA market are again center stage. We need to be aware of what is happening around us and how it can influence our industry.

            Chaille Brindley, the publisher of the Pallet Enterprise, recently wrote a series about the state-of-the-industry entitled “Welcome to the Future” in the Pallet Profile Weekly. I reference readers to this important report for more details about the issues covered here. Any reader who is not receiving the Pallet Profile Weekly can call us at 804/550-0323 for subscription details. This report is the only weekly source of news and analysis in the pallet industry. It is a must read in my opinion.

            Chaille wrote, “One definite change is the attitude of pallet companies that seem tired of talking about problems and want to truly answer them. Although the industry somewhat remains at a crossroads, the time for action has come. If the industry doesn’t mobilize soon to tackle key concerns, it may be too late to mount a response. This includes building an industry cooperative pool to challenge pallet rental companies, finding workable solutions to mold concerns, developing better collaboration with other pallet companies to serve large clients, pioneering new ways to become more indispensable to customers, and charting the path toward greater efficiencies as cost pressures mount.”

            After all these years since the “historic” Memphis meeting, attention returns to the influence of pallet rental, this time as it relates to developing a new industry cooperative pool, such as PIMS.  The new Costco block pallet program is driving more manufacturers toward pallet rental; PECO and its red pallet seems to be a winner in this arena.

            iGPS and its plastic pallet have been center stage lately when it comes to public health and the environment. In addition, the plastic leader has had its own share of business challenges. Rumors abound of a shakeup in the company’s upper management which just compounds its many business problems.

            PECO has been the winner of late. In addition to attracting new business at Costco, it is launching operations in Mexico, and it was just bought out by a venture capital firm which has the funds to engineer PECO’s hope for aggressive growth.

            Conversations at this year’s NWPCA meeting often centered around PIMS and its potential. Will it become a viable alternative for our industry? Many people attended the sessions where this was discussed. Many considered the possibility of supporting the PIMS effort financially, and quite a few did agree to a support of at least $200 a month for the next year.

            Chaille closed his first article, “Will iGPS be able to rebound and make its economic model work? Will PECO’s new owners really put their money where their mouth is? Will PIMS transition from a good concept to a game-changing reality? Will CHEP truly be able to attract smaller customers and continue growth? Will an unforeseen player enter the pallet rental market over the next 12 months? Will more retailers follow Costco’s lead about mandating block pallets? These questions challenge me to believe that the best days could be ahead. But we have to realize that the ‘Future is Now! Welcome to the Future.’”

            The second installment in Chaille’s editorial on ‘Welcome to the Future’ focused on the lawsuits between iGPS and the NWPCA as well as economic factors affecting the pallet market.

            Citing concerns about the impact of a press release and public comments made by the NWPCA and its president, Bruce Scholnick, iGPS filed a lawsuit against the association and its president. Instead of silencing the association, this lawsuit spurred the association to take action. The NWPCA filed a counter lawsuit against iGPS alleging the legal action by iGPS is attempting to muzzle the wooden pallet industry.

            The NWPCA has a right to defend the pallet industry. It might serve as an opportunity to rally the industry. The association has established a legal fund that people can support anonymously to defray the costs of fighting iGPS in court. In addition to rallying the industry behind the association’s efforts, this counter lawsuit could distract the industry from focusing its attention and financial resources behind an industry cooperative pallet pool, such as PIMS.

            One of the biggest issues facing our world of change today has to be the oil situation and the unrest in the world, particularly the MidEast. The last few days, the earthquake, tsunami, and nuclear problems in Japan have caused people to be concerned about our Japanese friends, in addition to focusing attention on the fragile world economy and how it may be impacted by the effect these natural disasters might have on oil and world trade.

            Chaille’s third article on “Welcome to the Future” touched on a variety of topics that were presented at the NWPCA convention, including pallet sanitation, taxes, and OSHA. Here’s a quick rundown of  some key points on these issues.

            Shane Thompson of WestWind Logistics commented that customers must remember that pallets are not intended for direct food contact. A lot of their customers require inside storage. X-Mold offers a program to help facilitate communication and compliance with pallet customers.

            A representative from Abbot Laboratories encouraged the industry to take a look at RFID and two-D bar code options for tracking and tracing. He stated that plastic pallets are not necessarily a panacea for the contamination problem. Plastics can actually pull odor out of the air.

            No matter the taint, effective handling, storage and possibly cleaning procedures are the only way to ensure 100% sanitation for both wooden and plastic pallets.

            Chaille emphasized that a key business trend is to focus on providing expanded reverse logistics services. A number of attendees shared that they help customers dispose of all kinds of materials, including packaging, stretch wrap, garbage, returned merchandise, etc. Any reader who is considering upgrading facilities might find today to be the best time. Uncle Sam is making it more attractive than ever to spend on new machinery and plant upgrades. Last year companies could take advantage of a 50% bonus depreciation schedule; this year that figure jumped to 100%.

            The American Trucking Association said that the truck driver shortage  from a few years ago is likely to return as the economy rebounds. This will lead to higher costs to attract more drivers.

            To read more, you need to subscribe to the Pallet Profile. Call 804-550-0323 to subscribe. As Chaille wrote, “Welcome to the Future!” Excitement is again center stage in the pallet industry.

 








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