Whitewood Under Siege: Wooden Shipping Pallets

http://www.cabinetmagazine.org/issues/52/hodes.php

by drjohnson • 12 years ago

325 70 12 years ago

GFischer2• 12 years ago

A really compelling read.

How many hidden industries like the pallets one are out there, waiting for software (or hardware) aid or disruption? I mean, 3.5 billion in pallet-related revenues :) , and millions in losses due to lack of tracking... is RFID really the best solution?

msandford4• 12 years ago

How much does a pallet cost to manufacture and how much does a lo-jack cost to implant? Further, how much does it cost to keep the lo-jack running for a decade?

I used to run a 10,000 sqft logistics facility (really tiny in that world) and we kept a stock of about 20 pallets. I seem to remember the wooden ones costing $2-$5 used and the plastic ones less than $50 new. The most expensive pallets I could find from U-Line are $100 or so. http://www.uline.com/BL_8204/Rackable-Pallets

Figure that adding an armored place to put a lo-jack would cost $5-$10 (gotta protect it) and that the actual lo-jack would cost at least $50. It would need to be metal encased with a way to sneak an antenna out, have a "lifetime" battery (lithium-thionyl-chloride, not cheap http://www.all-battery.com/lithiumprimarybatteries.aspx) and the whole thing would have to be molded in to the pallet lest someone get clever and remove them cheaply. The batteries MUST be an integral part of the lo-jack so that someone couldn't just remove the batteries and neuter the device.

Then the data plan to keep it connected up to the world via the internet would cost at least a buck or two every month (in HUGE bulk purchases, individually it's something like $10/mo/device). Worse is that if someone puts them inside a metal building or metal shipping container or metal truck they're going to have a hell of a time getting a GPS fix and/or communicating with the cellular network.

So now that you've done all this your $40 to $100 (max) pallet now costs at least $50 and perhaps even $100 more PLUS it costs you something monthly whether people are renting it or not. What do you get to charge for this? From when I can tell, about $5 per trip. http://www.palletforum.com/tm.asp?m=26458 That's on a nominal $20 pallet cost although they may cost more now, the forum post is 2 years old.

I can't see how building a lo-jack into a pallet is going to be a compelling value proposition given all the limitations.

GFischer2• 12 years ago

I work for an insurance company. The company currently pays for lo-jacks for high-end cars, and has often studied the cost of installing some variant of it for the entire fleet.

A GPS car tracker costs a lot less than what you're quoting, when purchased in bulk from China (I don't know about reliability figures though :) ). I think it was in the U$ 15 range for the entire thing. Certainly not the armored thing you're describing, which sounds pretty expensive.

And the cell phone data plan could be negotiated way down (I think your estimate is correct, about U$ 1 or 2 per month). What I pay here as a consumer in Uruguay is less than U$ 5/month for 384 megabytes. Getting a fix is definitely a problem, but you can track it until it gets inside wherever it lost the signal (hopefully it's a warehouse).

That said, there's a lot of low-hanging fruit to start putting GPS trackers on pallets :) (I still don't see them being ubiquitous with pets and other higher-value items to track).

If it wasn't feasible for cars (MUCH more expensive than pallets), then I agree with your estimate that it won't happen soon, but it's going to be possible sometime in the near future (and somebody is going to be ready for that, and make a killing).

phpnode3• 12 years ago

lojack won't work for the reasons you mention, RFID really is the best solution because it's cheap and they don't need to change their existing inventory. There's no need for plastic pallets, they could embed the RFID tags into each of the wooden blocks which make up the corners of the pallet. If one doesn't already exist, it's probably quite simple to produce a nailgun like device which literally shoots an RFID tag into a block of wood, which would make tagging existing pallets straightforward and cheap.

The palettes are cheap enough that they actually don't need the exact location of each of them. All they need is the ability to track pallets at certain points in the supply chain, which will give them a good indication of global pallet movements.

RFID tag readers are also quite cheap so you could potentially fit a lot of them at relatively small expense. They could be embedded into the flooring of trucks, the entrances of warehouses and the arms of forklifts.

mrerrormessage• 12 years ago

What if the pallets formed a mesh network? They would only need to have low-powered antennas (< 100m range) to network effectively with one another, and some kind of reader that talked to one could know all the other pallets that that one had "seen" and at what time. It would take a bit of work, and would be most practical for large pallet storage areas, but it could hugely cut costs, especially for wireless internet.

surrealize• 12 years ago

Just thinking out loud here--what about just using RFID for most of the pallets, and then putting powered electronics w/GPS only in some fraction of them? Say, 1 out of 20 or 50 (or whatever) pallets would have a battery, GPS, and an RFID reader; then those could read the RFIDS on any nearby RFID-equipped pallets. And transmit their location and the nearby RFIDs back to home base.

mozey• 12 years ago

I have actually written some software for keeping track of pallets. This was about 6 years ago. There was about 10K wooden pallets and 90K plastic crates to keep track of. We also had CHEP pallets. These had to be tracked separately and manually updated on CHEPs IE only website with no API. No RFIDs were involved. The system required two manual counts. One on pick up and another on delivery. If the two counts were way off, or one end was missing, the shipment would be flagged. It kind of worked.

wikwocket• 12 years ago

How many hidden industries like the pallets one are out there...

Within one standard deviation of the mean, all of them.

Most hackers trying to 'disrupt' things naturally only work on what they know. So a lot of solutions are developed for industries everyone knows about: restaurants, travel, education, etc.

But most of the world's industries are not conducting business out in the open. They are operating inside factories, warehouses, labs, shipyards, trainyards, depots, private buildings, on the road, and in the field.

This is why a little niche knowledge is so powerful. Many industries only see innovation from people within the industry. But they usually have the same technical background as everyone else there, and the same blind spots. The hacker who has (or can get) enough domain knowledge to apply hardware and software in the right places is basically a Wizard.

Joeri• 12 years ago

If you're interested in this kind of behind-an-industry reading I can highly recommend The Pleasures and Sorrows of Work. http://alaindebotton.com/work/

gohrt• 12 years ago

YC application question: "How have you hacked a system in real life?"

What is most vexing to many recyclers is the belief that the accumulation of blue pallets in their yards is not an accident, but a deliberate CHEP strategy. After all, collecting these stray pallets takes a lot of labor, a lot of miles, and a lot of trucks. If you are CHEP, why do this work yourself if you can get someone else to do it for you, at a price that you dictate?
In 2008, a group of recyclers filed a class action lawsuit, claiming that CHEP was leveraging its dominant market position, and violating anti-trust law, by transferring its operational costs onto recyclers. The recyclers argued that CHEP had made them into a “conscripted collection army.”

quinndupont• 12 years ago

Stunning to see Cabinet Magazine being referenced on HN. For those that don't know, Cabinet is an excellent magazine that covers many topics, but has something of a philosophy and art focus. Great article, as always.

danmaz74• 12 years ago

Now I understand the bizarre reference to "negative space" when describing a pallet!

sxcurry• 12 years ago

This is why I read HN - fascinating article, knowledge of an industry I had never thought about before, and a heads up about a new source of information, Cabinet Magazine. Thanks, HN!

MisterBastahrd2• 12 years ago

Note: I worked for a large grocery chain for 7 years

Plastic pallets are vastly superior in the long run to wooden pallets in terms of durability, and many companies have used them for almost two decades interchangeably with wooden pallets. One of the issues here is that once a pallet enters the supply chain, who knows if or when you'll get them back. When I first started working for the grocery chain, there were over 30 pallets of back inventory sitting in the warehouse (this is a very bad thing and I corrected it during my time with the company).

The main problem with wooden pallets is that they are largely made with inferior wood that can't stand up to the stresses applied to them for a long period of time. If any of the center slats break, there's no problem. If one of the ends break, then you're probably going to be cleaning up a warehouse floor from whatever was on the pallet. People are also more likely to walk away with a wooden pallet since they have plenty of utility and are very inexpensive.

That isn't to say that plastic pallets are without fault, even if they are virtually indestructible. Most plastic pallets are manufactured with a diamond plate pattern. That's nice and all, but it's still plastic and therefore, slippery. Place some frozen or refrigerated food on a pallet destined for a windy area and have fun cleaning bananas out of the back of the truck.

So the best of both worlds would be a plastic pallet with a non-slip coating on the top of the pallet and the feet.

stephengillie3• 12 years ago

I also worked in the grocery industry for most of a decade.

My sister worked for local fast food and general retail chains (Taco Time & Target) and I was always amazed at the lack of palletization they used. Target especially.

Target sends several trucks a day to each store. Each truck is half-full, and half of that freight is simply "stevedoered" into the truck, not put on pallets. So emptying a truck is a several-hour process of moving individual boxes of merchandise out of a truck by hand. What pallets they do use are often poorly stacked (by retail grocery standards), not well wrapped, and often fall over in transport.

Wal-Mart, by comparison, looks to have embraced the same "CHEP-only" policy as Costco.

batmansbelt• 12 years ago

What's taco time?

MisterBastahrd2• 12 years ago

Winn-Dixie had a warehouse policy of wrapping every pallet with plenty of plastic wrap. This didn't completely stop them from falling over, but usually the top of the pallet's contents would become partially dislodged, which was a minor annoyance at best. It usually took a team of two a half hour to offload about 30 pallets of grocery items off of a truck and load up bales of cardboard for recycling, and about 5 hours to break down the pallets and stock the store.

Part of Target's madness might be in the extremely different kinds of merchandise they're selling, but most of those products are small, and Winn-Dixie solved the problem by sending these products in plastic totes.

sparky• 12 years ago

The lack of palletization on Target's trucks seems inefficient at the store level, but may be justifiable at the company level, since Target owns its own distribution centers:

* Trailers are 9-10 feet high, so a fully palletized truck would (a) Have very tall unwieldy pallets, and you'd have to carefully order things so boxes on the bottom don't get crushed, (b) need racks or something similar to hold multiple tiers of normal-height pallets, or (c) be half-empty

* Even with the current process, getting boxes off the truck is not even close to the bottleneck. When I worked at Target, 2 people threw boxes onto rollers, 5-6 people sorted the boxes onto pallets organized by area of the store as they went by, 2 people rolled those pallets onto the sales floor and threw each box in front of the appropriate aisle, and ~20 people opened the boxes and stocked the shelves. The 2 people unloading the truck could always keep well ahead of the 20 on the sales floor.

* An alternate strategy might be to sort the boxes into pallets by store area at the distribution center rather than at the store. You might get some economies of scale out of doing this process for 100 stores at 1 distribution center, but it may still not be worth it to put all that needed floor space, latency, and congestion in what I imagine is already a very congested point in the supply chain. Better to distribute that part to the endpoints, since you already have 100k square feet per store to work with that's just sitting there while the store's closed.

stephengillie3• 12 years ago

Interestingly, this article completely leaves out soda (aka pop aka coke) pallets. All of the major soft drink bottlers use about the same size and shape pallet, and it's much smaller than the traditional whitewood pallet. Often, they'll put their pallet onto a square pallet, then that one a whitewood pallet, when they deliver to grocery stores.

Pepsi, Coke, and other soft drink and beer distribution companies even have their own, smaller, powered pallet jacks. The powered pallet jacks that grocery and other retail stores use are usually too big for these smaller pallets.

These companies have been slowly moving to plastic pallets over the past decade, and wooden pallets of those dimensions are hard to find today. The plastic pallets offer some level of 4-way access as well.

---

Edit: I had forgotten about these full-size plastic pallets. They are so much cleaner and easier to use. Even new whitewood pallets leave behind a cloud of splinters and wood dust. These leave behind some shipping dust as there are no cracks for dust to fall through. They stack more securely and don't get heavier when wet like wooden pallets. And you can stack about twice as many in the same space.

http://www.foodlogistics.com/article/11442316/smaller-faster...

lotsofmangos3• 12 years ago

You could easily make a cheap machine that could make pallets to order out of plastic packaging scrap on-site. Judging from this article though, that might annoy a hell of a lot of people.

oh_sigh• 12 years ago

So do it and become a multi millionaire. Oh wait, it actually isn't "easy" like you said.

jacquesm• 12 years ago

Have you ever seen an injection moulding machine that can produce something the size of a pallet? Do you know how much energy it takes to run one and how much expertise to keep it running? How much it costs? How much energy is required to power the recycling process?

http://i01.i.aliimg.com/photo/v0/1830977371/plastic_pallet_i...

These machines are viable because they run continuously (at least, when they're not broken).

You don't make them 'on-site', you make them in a thing called a factory because that's the only place where you can get the economies of scale to justify your capital expenses and your operational overhead as well as your energy supply arranged in such a way that you'll turn a profit.

I'm all for decentralization but there are good reasons why the word 'easily' is not applicable in the sentence above. Annoyance does not come into play until you've figured out how to do this economically.

mbreese• 12 years ago

You wouldn't use injection molding for a pallet - it's too big. However compression molding is an option. It's not as accurate as injection molding, but it's significantly cheaper. Or at least it is at the scale my father-in-law works at when he makes plastic pallets :). His pallets are custom designed for a specific industry to fit in their manufacturing and logistics workflow.

jessaustin• 12 years ago

Maybe this is a rare streak of jingoism for me, but it seems odd that a foreign company has been able to come in and dictate through the courts that the whole industry should work on a completely different model. Perhaps the reason "blue" is such a good deal for shippers is because much of the real cost has been transferred to third parties. ISTM the courts should force CHEP to include a significant deposit in its contracts, or else forgo the discounted forced labor of the recyclers. It wouldn't have to be a 100% deposit, but it would have to be high enough so that shipping destinations were no longer indifferent to whether the pallet was returned to CHEP or recycled or stolen.

Lagged2Death• 12 years ago

...it seems odd that a foreign company has been able to come in and dictate through the courts that the whole industry should work on a completely different model.

Remove the word "foreign" and that statement still makes sense and it still describes an objectionable state of affairs. No jingoism required.

vacri2• 12 years ago

A foreign company has been able to come in and dictate through the courts that the whole industry should work on a completely different model.

Welcome to the world outside the US.

gig3m5• 12 years ago

While CHEP definitely has changed the way some retail supply chains work, overall the pallet industry largely works the same as it did before CHEP was on the map. We build upwards of 2mil new manufacture wooden pallets per year and I never run into CHEP as an alternative for the sectors I service.

Source: I run one of the largest pallet manufacturers in the US, 50+ year old family business.

dewey• 12 years ago

There's also an interesting system in Europe called EUR-pallet. [0]

They are usually made out of higher quality wood and quite durable. The system works by trading pallets for pallets, so if you receive some goods on a EUR pallet the driver takes an empty EUR pallet from your stack and it'll be reused at the other company.

[0] http://en.wikipedia.org/wiki/EUR-pallet

gumby2• 12 years ago

EUR-pallet isn't the only alternative.

I'm fascinated that after all these years there isn't a standard pallet size. I have tried to design products that can "ship on a pallet" and end up shooting for a footprint one meter on a side which fits within a lot of format but leaves plenty of wasted space:

https://en.wikipedia.org/wiki/Pallet#Dimensions

gig3m5• 12 years ago

1) There are plenty of standards in the pallet industry, especially in the EU. (http://www.palettes-cp.com/welcome-en.html) The US has the 48x40 GMA which for many years was used almost exclusive in the grocery chain. These standards were born of similar or exactly the same needs from different customers. Things like 2x2 barrels, poly supersacks, square and octagonal boxes, etc. All those things are standardized and so the pallet that goes underneath them is largely the same.

2) Customization is a factor of efficiency. Why would someone shipping a product want to buy a standard size pallet that doesn't fit or hold the weight requirement for his use case? Instead, he consults with either internal packaging specialists (in big companies) or a manufacturer directly to design a pallet to fit his load. By doing this he actually knows the limitations of the packaging (stacked x high, racked, weight distribution, unstacker and rollerbed compatibility, etc) and also has some general idea that the product he is receiving is correctly priced for his requirements. Many times those requirements are customer driven, meaning my customer's customer.

Source: I make pallets, lots of them.

Cthulhu_2• 12 years ago

I dunno, I've seen those around a lot, but when I was working at a DIY store we'd just stack empty pallets behind the building, a guy would come pick them up every month and use them for firewood (and make a buck off of selling the nails for scrap. Supposedly).

dustin11143• 12 years ago

I've worked in grocery logistics for several years, and can tell you from experience just how political CHEP, PECO, and iGPS pallet distribution can be. Because of the size of my organization's warehouses, CHEP especially requires stringent audits, and if a truck sent out with CHEP when it was not supposed to, the gestapo comes after you.

I will admit, though, that CHEP are the best when it comes to quality (other than iGPS, perhaps). They are far less likely to have splinter, warp, and degrade. They are also much more resilient to the abuse that the supply chain puts on them.

An important point to remember is automation. The logistics industry is becoming more and more automated. Consistent, high quality pallets are becoming a must. The typical hi-lo is becoming less and less common, while in its place are robotic automated guided vehicles, distribution conveyors, and high-bay storage and retrieval machines. I know from experience how much pain and frustration is caused by broken stringers, splinters, and warped whitewood (in our industry, we call them GMA pallets [Grocery Manufacturers Association]]. Literally days of lost time annually, which can equate to millions of dollars.

I have no real opinion about what the best direction is. You either fork out more up front for the good stuff (with all of its politics), or you just deal with the bad quality and inconsistencies of whitewood.

I have to say, this was a very interesting article...a nice change from Python 2.7 vs. 3.X!

gig3m5• 12 years ago

Disclosure: I run one of the largest wooden pallet manufacturing companies in the United States. My family has been in this business for 50+ years.

Your perspective on whitewood comes from a 3rd tier perspective (grocery, as you say). In other words your various suppliers buy their pallets from various sources and then ship their product into you on those pallets. You and your (former?) employer are not directly involved in their procurement so you have little say in what you get, and I'm sure the quality varies widely.

That being said whitewood pallets (or just wooden as we would say) are actually a very cost effective and reliable way to ship product in the US, much more so than plastic. There are many quality manufacturers around the entire nation that provide great product and service, much better than your experience seems to suggest. Plastic is expensive to buy, more expensive to lose, and has various other problems and concerns.

To compare a built CHEP pallet with a "whitewood" pallet is a bit misleading however in several directions, especially to come to the conclusion that they are the "good stuff". They are the good stuff in terms of build quality because (by my estimation) they are built roughly 3x as strong as a generic 48x40 (standard GMA pallet.) They also cost upwards of 3x as much to manufacture and the process is no different than the bad quality pallets that you have had experience with. (Estimated GMA is about $10-11 per, CHEP block pallet would be above $30, depending on locale.) Of course they hold up better, they are built to do so. However, the pallet industry has gone from standardization on sizes in the last 20 years (GMA 48x40, Coke pallet 36x36 mentioned below) to being specifically engineered to the load it was made to carry.

TL;DR: There are wooden pallet manufacturers out there that produce a high quality product. CHEP and plastic are both expensive but have their own issues.

aurelian• 12 years ago

Aside from expense, what issues do plastic pallets have?

dustin11143• 12 years ago

I have no disagreement with you on the merits of both CHEP and GMA pallets. I have have experienced good and bad pallets of both types, and the cost is definitely the deciding factor in the equation.

Generally, these are the pros and cons I see with the major types of pallets:

Pros ==== GMA: inexpensive, standard, lightweight (a VERY big deal when cubing out a truck), easy on the supply chain.

CHEP: pretty consistent, longer lifespan

iGPS: very consistent, easy on automation, they feel indestructible

Cons ==== GMA: generally a shorter lifespan, inconsistencies between manufacturers, quality varies

CHEP: expensive, heavy, red tape

iGPS: extremely expensive, heavy, red-tape

And yes, depending on the vendor, the quality of GMA pallets varies. There are excellent pallets that hold up and seem to be built with quality material, and there are others that feel like they break into pieces after a few handlings.

vacri2• 12 years ago

The article is stacking the deck pretty heavily:

After all, collecting these stray pallets takes a lot of labor, a lot of miles, and a lot of trucks.

they receive blue pallets whether they want them or not

So the recyclers' hands are tied because they receive pallets mixed in with white pallets when delivered by the truckload, but then they get to turn around and talk of all the effort collecting them. It's not hard - just educate your customers - "I won't pay for blue pallets, because they're rented equipment. You can ship them to me, but I'll reduce the payout for a truckload by the number of blues". What the article is promoting is that the recyclers get to play the innocent... then directly profit off it.

Don't get me wrong, I think the idea of renting pallets is stupid, but then again, I'm not making $3.5B/year. But the article seems to gloss over the fact that selling something you do not own is not legal, regardless of how much labour you put into it (otherwise burglary and fencing would be legal). These pallets are clearly marked; it's not like they're hard to confuse.

exhilaration• 12 years ago

"I won't pay for blue pallets, because they're rented equipment. You can ship them to me, but I'll reduce the payout for a truckload by the number of blues".

Correct me if I'm wrong but my impression from reading the article is that recyclers don't pay for those used pallets, they're just taking away what would otherwise be trash. So there's no incentive they can offer to eliminate the blue pallets from what they're receiving.

msandford4• 12 years ago

It depends on the place. If you only have a few pallets you probably get charged for the pick-up. If you have many pallets you get paid a small amount. There is a cost associated with getting a truck from one place to another irrespective of how loaded down it is.

Part of the reason the whole CHEP thing happened is that there is very little high-level communication that goes on around all this. The pallet supply chain is mature and the folks managing it don't necessarily talk to the folks making it happen day-in and day-out all the time. Getting them to enforce some kind of rule that they will view as bullshit is going to be next to impossible. The blue pallets will show up at your facility anyhow and are you going to pay to ship them back? And then bill your customer for the cost of shipping them back? Either they won't pay and you'll have to take them to collections when they switch to a new recycler or you'll roll over since you want to stay in business.

When you're moving $10k worth of stuff on a $10 pallet and paying $2 to get it picked back up the $2 is a joke. When it costs $2 to pick a pallet up and $2 to send it back and your profit margins are probably 10-20% then if you get 5% CHEP pallets you end up paying double for them if you try and do the right thing (which eats up your 10% margin) or you just look the other way and don't think too hard.

davidbanham• 12 years ago

CHEP and Bunnings (the dominant hardware retailer here) had a big spat over this recently.

http://www.smh.com.au/business/bunnings-11m-pallet-cleanser-...

They now refuse to allow any CHEP pallets on to any Bunnings site. LOSCAM, whitewood or nothing.

acomjean• 12 years ago

One of the theories on how the Asian Long Horn Beetle (an invasive insect that is also a wood boring bug) came to the US was in wood used in shipping. Either palettes (skids is the term I've heard), or wood bracing in shipping containers.

Plastic doesn't seem so bad.

davidw• 12 years ago

Yeah, the place I work for these days ships to certain countries with plastic pallets because of the risk presented by insects.

ptaipale2• 12 years ago

As a software engineer, I have only once in my lifetime delivered something for which I had a certificate that it was bug-free.

This was when the company was moving some work to be done in India. We shipped a lot of used servers there, and they were on wood pallets. Prior to shipping, the Indian customs required a paper called phytosanitary certificate for the pallets. It meant the pallets had no bugs.

gadders• 12 years ago

Typical: https://news.ycombinator.com/item?id=7672923

No-one talks about it when I submitted it.

Cthulhu_2• 12 years ago

One major downside of the wooden pallets is the ever-present risk of fire. I worked at a food/vegetable processing plant once, it'd get vegetables from the field, we'd pack them, chuck 'em in boxes and stack them on pallets. (vacation job, yay)

Next to the plant were huge stacks of wooden pallets. Years after I worked there, the whole plant burned down; a fire started in the pallet stack, and since they're awesome fire material they took the whole factory with them. Not sure if it was accidental or intentional though.

Bonfires and world record attempts for bonfires often involve large amounts of wooden pallets. Cheap, very open, stable/stackable, ideal fire material. There's a picture of the world bonfire record in Norway where they build a giant tower out of pallets.

ptaipale2• 12 years ago

Isn't fire also a danger with plastic pallets? Generally, plastic fire is even worse than wood fire (in terms of heat and toxic substances generated). Wood burns, but it isn't instantly flammable and may in some circumstances withstand fire better than steel (though this is counter-intuitive).

You can add chemicals to plastic to make it resist fire, but those have other problems, often with toxicity.

Generally, if you have huge stacks of some unused material in a place, and it can catch fire, there is something wrong with the process. It would make sense that those pallets are worth some money so you can get rid of them easily. If not, should the local authorities control the amount of material stored if it can be a hazard?

Whitewood Under Siege: Wooden Shipping Pallets

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