Pallets

by on December 18, 2014 at 2:16 pm in Economics, History | Permalink

On the topic of pallets, Jacob Hodes writes:

There are approximately two billion wooden shipping pallets in the United States. They are in the holds of tractor-trailers, transporting Honey Nut Cheerios and oysters and penicillin and just about any other product you can think of: sweaters, copper wire, lab mice, and so on. They are piled up behind supermarkets, out back, near the loading dock. They are at construction sites, on sidewalks, in the trash, in your neighbor’s basement. They are stacked in warehouses and coursing their way through the bowels of factories.

The magic of these pallets is the magic of abstraction. Take any object you like, pile it onto a pallet, and it becomes, simply, a “unit load”—standardized, cubical, and ideally suited to being scooped up by the tines of a forklift. This allows your Cheerios and your oysters to be whisked through the supply chain with great efficiency; the gains are so impressive, in fact, that many experts consider the pallet to be the most important materials-handling innovation of the twentieth century.

And there is this:

Not all pallets belong to the world of whitewood. The most important other category—and whitewood’s chief antagonist—is the blue pallet. These blues are not just a different color; they are also built differently, and play by different rules, and for the past twenty-five years, the conflict between blue and white has been the central theme in the political economy of American pallets.

The full story is here, and it is one of the best long reads of the year.  For the pointer I thank Michael Tamada.

1 Marc December 18, 2014 at 2:19 pm

“that many experts consider the pallet to be the most important materials-handling innovation of the twentieth century.”

Those “experts” forget about shipping containers which maybe just as important!

2 JFA December 18, 2014 at 2:32 pm

But would the containers be so useful if you couldn’t easily load and unload them?

3 Urstoff December 18, 2014 at 2:39 pm

But what would we do with all those pallets if we couldn’t put them in shipping containers?

4 jfrum December 18, 2014 at 3:06 pm

I don’t think most units get palletized before entering the container. That happens at a DC or a TF.

5 Hillary December 18, 2014 at 7:45 pm

It depends on the product. Floor loading used to be the norm, but a lot of packaging is designed to max the container while pallet used these days.

I used to work with an exercise machine that was designed to exactly dim out a container. They had about 70 cubic feet left in a 40′ can. Our forklift driver could unload one in 15 minutes.

6 dearieme December 18, 2014 at 4:38 pm

You can’t make a good compost heap with shipping containers.

7 Florian December 19, 2014 at 7:01 am

Containers and pallets are both great innovations for standardized transport.

The real tragedy is, that the two don’t work well together.

A Standard 20-Foot-Container is (inside) 5,90m x 2,35m
A Standard Euro-Palet is 1,20m x 0,80m.
If the Container were just 0,10m longer an 0,05m wider, it would be a perfect fit for 4×3=12 palets.
As it is, it can only hold 3×2=6 palets plus lots of empty space

8 mkt December 20, 2014 at 2:04 am

Yikes, talk about multiple equilibria — and we’re in a sub-optimal one.

Unless they’re able to use that empty space to wander between the pallets and retrieve specific desired bundles, instead of having to use FILO retrieval?

9 rayward December 18, 2014 at 2:24 pm

It’s like containers, which are an even greater innovation in the shipment of goods. Or tilt-up concrete construction. We obsess over electronic gadgets but the innovations that are much more significant are actually quite simple. Oops, I just noticed Marc’s comment. I’ll publish mine anyway.

10 dave smith December 18, 2014 at 2:25 pm

Ah, the importance of the mundane. I love stuff like this.

11 Urstoff December 18, 2014 at 2:29 pm

Planet Money did a show on the blue pallet a few months back, IIRC

12 JFA December 18, 2014 at 2:31 pm
13 Jan December 18, 2014 at 2:34 pm

Highly recommended.

Next thing you know they’ll be doing whole shows about shipping containers!

14 charlie December 18, 2014 at 2:46 pm

This is a long read?

15 Brett Champion December 18, 2014 at 3:16 pm

I have a special affection for the pallet. They are what put a roof over my head, clothes on my back, and food in my belly when I was growing up. My father co-owns a sawmill with two of my uncles that since the late-70s has made nothing but pallets.

16 Kevin- December 18, 2014 at 3:26 pm

And you can build tiny houses with them: http://www.viralnova.com/build-a-pallet-house/

17 rayward December 18, 2014 at 3:59 pm

Old Containers, like old pallets, never die. One enterprising fellow rented them as make-shift billboards (with the sides painted with the promotion). I’ve even seen them used for make-shift housing.

18 (Not That) Bill O'Reilly December 18, 2014 at 7:00 pm

There’s a fairground just down the street from the D.C. ballpark bordered by stacks of abandoned shipping containers. It’s a pretty neat experience.

http://www.fairgroundsdc.com/www/

19 Jan December 18, 2014 at 8:51 pm

There is a Big Lebowski themed container store at the fairgrounds called The Dude. It is kind of a convenience store with beer on tap.

20 rayward December 18, 2014 at 4:03 pm

As for tilt-up concrete construction, it revolutionized the construction of industrial buildings, making it much faster and more efficient (and standardized). I’ve been waiting for the construction of housing to have a similar innovation. Any enterprising, engineering types read this blog?

21 Steve-O December 18, 2014 at 8:09 pm

My contractor specified it for a new build, had we torn down the old house, but we ended up renovating.

22 Brian Timoney December 18, 2014 at 4:09 pm

“Pallets” vs. “Skids”: what you debated circa 1988 at a $3.85/hr warehouse job in pre-gentrified South Boston.

23 Jan December 18, 2014 at 8:52 pm

ThAY’re skids, kid.

24 prior_approval December 19, 2014 at 11:02 am

Wow – I was being paid 3.35 dollars an hour ca. 1978 in Fairfax, VA – and we never debated whether it was pallet or skip when Old Dominion or or Continental or Yellow freight delivered another 10 tons of textbooks at Student Union II at GMU.

25 prior_approval December 19, 2014 at 11:14 am

Talk about memory failing with age – in 1978, that would be the original GMU Student Union. The move occurred a couple of years later – probably in 1981/2 (I should remember, having been in charge of major parts of that decades ago move, but age does that).

And in Germany, CHEP is pretty much irrelevant compared to EU normed EUR/EPAL pallets – http://en.wikipedia.org/wiki/EUR-pallet – at least if the customers of a German ERP software product are to be believed.

And from personal experience of burning them in the past, EUR pallets tend to be hardwood, not soft.

26 eddy December 18, 2014 at 7:36 pm

Ikea’s been trying to change this for a while: “Swedish retailer Ikea is replacing wooden pallets with a paper variant that’s lighter, thinner, and—the company says—cheaper to use…”

http://www.businessweek.com/magazine/ikeas-challenge-to-the-wooden-shipping-pallet-11232011.html

27 observor December 18, 2014 at 7:44 pm

Interesting link . . . topic. A lot of pallets are made of untreated oak and make good firewood. I say that without verification, just hope, as I’ve burned a lot of them. There is no “whitewood”, that’s a vernacular or industry term. Wish you had a “like” button here . . . would save from commenting, yet with the ability to show appreciation.

28 observor December 18, 2014 at 7:58 pm

Astounding statistic:
” Studies have estimated that pallets consume 12 to 15 percent of all lumber produced in the US, more than any other industry except home construction.”
http://www.cabinetmagazine.org/issues/52/hodes.php

29 Ray Lopez December 18, 2014 at 8:10 pm

They use blue pallets, but made of plastic, here in the Philippines, and recyclers do hoard them, like in the US they hoard old tires (or maybe they can’t get rid of old tires). What is amazing to me are the barges for San Mig beer. They are so shallow, and stacked so high with beer on pallets, and have to be towed between islands, sometimes an hour or more, so if there’s any unforeseen storm they will be swamped. I bet a few have sunk. The beer is offloaded by a forklift that drives from the wharf right into the barge, with a small ramp connecting the two, so there’s no need for lifting the pallets. BTW the ships here are rust buckets, like the trucks and jeepneys, but somehow they keep going.

30 Hopaulius December 18, 2014 at 9:55 pm

Diving, anyone?

31 Ronald Brak December 19, 2014 at 12:05 am

I’d expect it wouldn’t be long before it was salvaged, but you’d have to ask Ray about that. Sometimes people do leave $20 lying on the sidewalk or beer on the bottom of a shallow sea.

32 Mesa December 18, 2014 at 8:21 pm

I just loaded 616 72 cell silicon solar panels banded to 28 pallets onto a 53′ diesel tractor trailer with an electric fork lift. I don’t think that ‘pallet’ is the most important noun in that sentence by a long shot. It’s like saying the shoe is the most important invention of all time. It’s idiotic.

33 anon December 18, 2014 at 10:30 pm

@Mesa, suggest you read “The Psychology of Human Misjudgment,” by Charlie Munger.

34 Mesa December 18, 2014 at 8:27 pm

Maybe Malcolm Gladwell and Tom Friedman can write a book: “Pallets Are Flat – Why the DNA Of The World is Actually Made Of Wood And The Terrifying Consequences It Has For The Next 10 Years”

35 Diana December 18, 2014 at 8:28 pm

My father has a fascinating story about how some local mafiosi in Brooklyn had a contract to supply the U.S. Army with pallets in the 1940s and 50s. The mob made a lot of money with pallets back then; I wonder if they still do? I wonder if CHEP’s “asset retrieval specialists” ever ran up against some equivalent muscle on the other side.

36 Noumenon72 December 19, 2014 at 4:13 am

My plastics employer used whitewood pallets because we shipped plastic sheets on odd sizes: 54×78, 42×24, and so on. We had a close relationship with a local lumberyard that CHEP probably couldn’t match. The tare weight on those blue skids is quite a bit higher, which wastes fuel. We also used pure plastic pallets with no RFID that I know of; they were slippery on stacks and tended to collapse, but they didn’t shed splinters into the plastic bins. (Flowing raw materials, from plastic regrind to cereal, are palletized by dumping them into 35-pound cardboard boxes called “gaylords”. Then mechanical “dumpers” tip them up till the material flows into a bin. Broken wooden pallets used to sometimes drop two-foot-long boards on my head when tipped vertical, so I preferred the plastic.)

37 Matt72 December 19, 2014 at 10:25 am

I worked on an assembly line in the mid 1990s in my small Canadian town, and pallets were key to the whole operation. I found the blue pallets much more reliable than the whites and remember them fondly.

In the position I held you had to quickly unload the pallets at one end–to supply the 50 or 60 meter-long line with most of its empty containers and whatnot–and then dash to the other–to pile the then product-filled containers and their shipping boxes onto a pallet (the boxes were usually filled with plastic shampoo bottles; one box held a dozen, one layer of a pallet would hold say 20, and the pallet would be stacked up to four or five layers high).

A fork lift would then move the properly filled pallets away to the shipping area, where the pallets would soon go into tractor trailers, destined mostly for the U.S. market.

My position serving the line required repeating the tasks–and the dash–over and over again relentlessly over the shift. If you couldn’t keep up, the line would have to stop, and up to eight coworkers would get to relax and watch you redouble the hustle to catch up. Productivity, of course, would nosedive.

You came to covet the heftier and more robust blue pallets (which in my day weren’t always blue), as the lighter and less robust white pallets were less reliable–they’d sometimes crack and crumble under the weight of the loaded boxes, or burst apart when the forklift picked it up; then you’d have to scurry to find a replacement pallet and re-stack it properly even as you kept loading the next pallet with the line’s continuing box output.

I learned to covet the blues, even dashing around to “borrow” them from other lines if my equivalent grunt there wasn’t paying close attention, or had an overwhelming stack of them.

Blues rule!

38 Abelard Lindsey December 21, 2014 at 1:04 pm

The blue pallets are all owned by Chep. The red pallets are owned by Peco. Both kinds of pallets are block pallets. The white-woods are made by all different manufacturers and they are mostly stringer pallets. The black plastic pallets are all made by a company called GPS.

Chep is, indeed, the 800 pound gorilla in the industry.

39 Patrick Caldon December 21, 2014 at 6:34 pm

An error in the piece – CHEP started as a government business. At the end of WWII the Australian government owned all the pallets and set up the pallet pool company as a successor to the military department. The Labor government of the day – late 1940s – had a policy broadly aimed at nationalising industries. But this party lost power and many of these companies were sold.

40 Mark Dietzler January 2, 2015 at 4:37 am

Wild card in all of this is the US Department of Defense. There you find pallets of all kinds, but each uses it’s own variants. The Navy likes winged pallets very much, for sling loading ships. The Air Force has their own pallet program for use with their airlift system. For shipping very heavy stuff, there is the reinforced hardwood pallet. All of them are based on the 48×40 standardized size.

41 Kevin January 2, 2015 at 5:42 am

“There are approximately two billion wooden shipping pallets in the United States.”

I don’t like to brag, but I own three of them.

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