Trade Mission Trip Opens Eyes to Asian Pallet Industry
Eye of Asia: New Jersey pallet company owner gets eye-opening look at Asian pallet industry while participating in trade mission to visit Japan, Republic of China and S. Korea
By Don Baldwin
Date Posted: 12/1/2000
A few months ago I was fortunate enough to receive an invitation to represent my company, General Pallet, on an international trade mission to Asia with New Jersey Gov. Christine Whitman. The delegation was organized as a means of promoting and exploring possible business opportunities abroad that would benefit firms headquartered in the Garden State. In addition to being a great honor to be in the delegation, it was personally a truly thrilling journey.
Although I have traveled extensively throughout Europe and North America, this was my first up-close glimpse at the three big economic shakers on the Pacific Rim: Japan, Korea and the Republic of China, who coincidentally are the biggest pallet users in the region as well. That is not too surprising since pallets are a direct reflection of product output, movement, and storage. And we all know from the origin labels on many of the goods found in our local malls that these three nations have a ubiquitous presence in U.S. consumer markets.
After an early morning departure from Newark, we landed in Alaska to refuel the Boeing 757 before crossing the vast Pacific and the International Date Line. During the many hours en route, I tried to give myself a crash course in Asian culture by devouring several books that I had picked up a few days before the trip. This proved to be a formidable task even on the longest of flights. I wondered what these people would be like and how their food would taste. And because of the business I am in, I wondered about their pallet industry and how it compared to ours in the U.S. I decided that at least part of my itinerary would focus on learning about how they produced, handled and regarded pallets in Asia.
Our itinerary included Tokyo and Fukui, Japan, Seoul, Korea, and finally Taipei in the Republic of China. As soon as you arrive in Japan, you quickly realize that, even though they are in a long-running economic downturn, this is a very busy and crowded little nation. From the airport to the hotel located downtown was nearly three hours of snarled, inching traffic, and that was in a motorcade with a police escort!!! Had we taken an ordinary taxi for the same ride, it would have taken longer and the fare would have been approximately $265.
With the help of the commercial attaches in the various American Embassies, I was able to arrange several meetings with executives of various "pallet" companies in the three countries we visited. They also provided me with excellent young translators who were very bright and helpful. Although they knew very little of pallets in the morning, by afternoon they were usually fluent in "palletese" and could keep up with the best of us.
One thing I discovered in talking with Asian pallet people, many of whom were sales or marketing folks, was that pallets are frequently a part of a material handling catalogue offering various products that may include everything from tote bins to fork trucks. From such distributors you can order a variety of stock sizes and even expendable designs that are distinguished by the use of low-grade softwoods from Russia or New Zealand.
Not surprising, the people I met were as curious about our pallet industry as I was about theirs, and they asked many thoughtful questions. In Japan, however, they offered some rather condescending remarks about American pallets. I was told by one manager, finger wagging, that Americans do not understand much about holding manufacturing tolerances. "When we say one millimeter, we MEAN a millimeter," he declared. He cited the fact that most multi-use pallets there are produced per JIS (Japanese Industrial Standard) guidelines, which are widely accepted domestically.
One of the largest pallet companies I visited was Eagon Industrial Co. in Kimpo-city, Kyunggi-do, S. Korea. Eagon is a vertically integrated manufacturer that produces its own raw material. It assembles very high quality pallets on Viking nailing equipment, which has been upgraded to penetrate their unusually dense lumber. They also produce molded wood pallets similar to the Inca pallet in the U.S. This product utilizes not only by-product and residue from their own milling operations but fiber from hogged municipal wood waste, too.
In addition to pallets, which are a small part of their output, they are extremely diversified and also make plywood, flooring, doors and jambs, high-grade molding and trim, agricultural boxes, fencing, treated decking, and even creosote-treated ties.
But the pallet rental companies are most often the buyers-suppliers of reusable, heavy duty pallets. The most popular sizes are the 1100x1100 double-face, two-way and the 1200x1000 block design. There several such rental pools operating, and they seem to be fairly popular among users. Like CHEP in the States, they have tried to create a durable specification for the multiple use pallet.
Unfortunately, much of this durability comes from some pretty exotic hardwoods that are procured from the tropical areas of Malaysia and Indonesia, since there seems to be very little domestic logging in the industrialized nations. These materials create a very durable pallet, but one is compelled to ask: at what cost to the environmental resources? Most of these woods are incredibly dense and absolutely beautiful in texture and appearance. But much of this material is being taken from slow-growing rainforest species that are not being replanted or managed properly.
As a card-carrying member of the NWPCA, I have always been a vocal advocate of quality wooden pallets. But that is because I have always been convinced that, in the U.S., we were reasonably conscientious about stewardship of natural resources ó specifically timber, which we know is renewable if managed carefully. The procurement of raw material in Asia, on the other hand, is done in a very different cultural and economic context. The attitude seems to be that you should obtain the best materials you can even if it means plundering somebody elseís landscape, as long as it benefits your own agenda. If economic success is the ultimate goal, then the means are justified.
It is a sad fact many Asian cultures have been identified in recent years as the primary traders and end-users of the most endangered plant and animal species on the planet. In Taipei, Republic of China, there is an open-air type of market called Snake Alley where you can stroll late into the night. And if you desire, you can sample a glass of warm blood from a large venomous snake, its heart opened with a small knife while you watch. This elixir runs about $4 and it supposedly has been resurrecting (excuse the pun) personal performance hundreds of years before Viagra became a household word. From rare woods and herbs to black rhino horns and ivory, this willing market creates the monetary rewards for those who have no moral concerns for vanishing species or the depletion of scarce natural resources.
Unfortunately, this also means that many pallets are being constructed, at least for now, from absolutely gorgeous materials that may virtually disappear in the not too distant future. The raw material situation may also serve to explain why I heard a recurring comment from pallet people in all the countries that I visited: wooden pallet usage will decline as time goes on. Although one Japanese executive thought that steel would some day become the material of choice, most folks seem to think that some form of plastic pallet will ultimately replace the wooden workhorse we all know and love. In fact, some of the largest rental pool companies operating in Asia are already comprised of nearly half high-grade wooden and half high-end molded plastic pallets.
Something else that seemed noteworthy in all Asia was the fact that at least some of the rental companies are logistically interfaced with each other. Not unlike the Europeans, they seem to have made more progress in the area of networking for mutual benefit, and it has allowed them to expand their presence in third-party management systems. Only recently have we seen similar efforts being made in the U.S. Perhaps we Americans are more independent and intrinsically distrustful of our competitors, and therefore we have lagged in such cooperation.
As we watch the global economy evolving in the years ahead, our paradigms will be shifting like sand dunes just to keep up and compete. Now more than ever before in history, our mission will be not only to meet the challenges in a rapidly changing environment, but also to simultaneously identify the new opportunities that will undoubtedly arise from those changes.
(Editorís Note: Don Baldwin is president of General Pallet in Readington, N.J.)
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