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Markets in Transition: More Pallet Users Looking for Low Carb Options
Pallet user columnist, Rick LeBlanc explores the emerging interest in carbon credits and carbon neutral pallet concepts for multi-national corporations.
By Rick LeBlanc
Date Posted: 8/1/2012
People wanting to eat healthy aren’t the only ones looking to cut out the carbs. Welcome to the new age of pallet marketing when one of the key selling points, at least for some major customers, is the carbon footprint of the pallet.
In case you were wondering, carbon footprint refers to the carbon created through the production and use of your pallet. The “footprint” is the mess you leave behind, like muddy boot outlines in the hallway. The only difference is that with carbon, it is the carbon dioxide generated and pumped into the atmosphere during the life cycle of the pallet from production through to its eventual recycling or resting place in the landfill. That carbon dioxide is commonly believed to impact the environment and global warming, and as such, interest is literally “heating up” in reducing carbon footprint.
Unfortunately, like any new trend, the marketing of carbon footprint initiatives related to pallet usage can also be a little messy and confusing, not to mention at times misleading. This is unfortunate, as the issue of carbon footprint is serious business, at least for some customers, and it has had a visible impact on the pallet decision-making process.
Take the case of IKEA. The announcement of its move from wood pallets to paper pallets for some shipments has received a lot of attention. The basis for the move was reportedly the elimination of the reverse logistics transportation that wooden pallets required, some 50,000 truckloads according to the Swedish-based retailer. With paper pallets being stuffed into the onsite baling machine, no movement of empty wood pallets is required.
“I firmly believe that we must lead by example and at IKEA Canada we are taking effective measures to minimize the impact of our business on the environment,” said Kerri Molinaro, president of IKEA Canada, earlier this year. “The paper pallet initiative is one example of the continuous effort we make to reduce our carbon footprint.”
While IKEA cited the reduction in pallet haulage, it was not evident that the retailer had conducted overall carbon footprint comparisons of paper pallets versus wood pallets in its supply chain.
Fast forward a few months later to June of 2012, and we see a new word entering the pallet marketing lexicon, that being the “carbon neutral” pallet. CHEP in Spain has been working
with Unilever on this issue. The idea is that the carbon footprint associated with the production and use of CHEP pallets for Unilever has been “offset” through the purchase of carbon credits. In other words, the carbon created through the manufacture and use of CHEP pallets by Unilever has been balanced through the purchase of avoided carbon usage from other entities, known as carbon credits.
Carbon exchanges now exist that purchase carbon credits from best in class companies with respect to carbon usage and sell them to entities that wish to neutralize their carbon footprint.
“When it comes to reducing carbon emissions, leading companies such as Unilever are looking at their supply chains,” said CHEP Iberia country general manager, Laura Nador. “The Carbon Neutral pilot program is a powerful demonstration of the environmental benefits that our business model provides. We are looking forward to sharing this offering with other like-minded customers.”
One of the claims intimated by pallet providers is that a pallet with a lower carbon footprint will benefit pallet users through their ability to sell their carbon offsets in the marketplace. The notion of selling carbon credits surfaced a few years ago with respect to the Canadian Pallet Council’s Electronic Container Transfer (ECT) technology that helps rectify pallet exchange balances without physically hauling pallets, taking trucks off of the road. One of the claims in its brochure is that using ECT can “generate Carbon Credits or other Environmental Reduction Benefits.”
More recently, a press release from Axios Mobile, a Canadian alternative pallet supplier stated that its pallet “provides revenue generation through carbon credit monetization along with operational savings.”
While the value of carbon credits is nominal today, the thought presumably is that they will become increasingly attractive as legislated incentives place a much higher value on carbon reduction in the future.
One country that is further along in the evolution of carbon legislation is Australia, and I wondered what impact was being felt there. I checked in with David Edwards of Loscam.
“Here in Australia the Government’s visionary (some might say divisive) Clean Energy Legislative Package (better known as the Carbon Tax) is expected to re-energize focus on reducing emissions and trying to stem forecast cost increases in power, fuel, packaging and compliance, expected to be around 4-10%,” Edwards responded, “Transport operators are facing a diesel price increase of around 7% and operators are switching to gas or duel fuel vehicles to offset this. Packaging costs are also expected to increase and we are hopeful in some instances this will encourage manufacturers and retailers to consider display ready merchandising units as a way of removing secondary packaging costs.”
“At Loscam we have been continuously working on our energy and waste reduction programs and now almost 90% of our pallets come from plantation timber, one of the best carbon sinks on the planet,” said Edwards.
He added, “We are seeing some impact on timber prices as certified sustainable timber prices are growing at a faster rate than non-certified, and as always our response has been to keep lifting our use of recycled timber in the repair process, work on joint education programs with our customers to extend the life of our pallets and work more closely with plantation operators.”
Carbon footprint as a marketing theme covers some of the important angles that pallet suppliers have already been targeting, such as cost considerations, including fuel reduction, as well as climate and sustainability goals. It is interesting to hear about Loscam’s approach of using plantation timber, and emphasizing recycling and extending the life of its assets through joint education programs. This is something that is good thought for any pallet company.
Additionally, pallet offerings that have an obvious potential to take trucks off of the road or reduce the weight of trucks will continue to strike a chord of interest from pallet users who find themselves under increased pressure to deliver on cost containment and sustainability goals. The marketing term of choice may or may not change over time, but the issues involved in carbon footprint won’t be going away any time soon.