Pallet Pooling and the Circular Economy
When effectively executed, pallet pooling is an approach to pallet management that can help promote pallet reuse and help save money for pallet users. It is also an environmental best practice that too often flies under the radar. That is rapidly changing, however, as pallet pooling providers are increasingly recognized as successful circular economy solutions.
Over 70 years since the emergence of pallet pooling, the concept is now celebrated as a circular economy (or sharing economy) best practice. This recognition comes at a time when companies are urgently pursuing strategies to reduce climate change impact, solid waste, and pollution. For many operators, pallet pooling will be a relatively straightforward solution that can help them gain momentum in their shift to circularity.
For those supply chains currently exploring or reassessing the opportunity for pooling, they can draw upon the experience of others. Pallet pooling first began with the U.S. military during the Second World War, when pallets were shared between supply plants.
In the decades that followed, several leading pallet pools were formed, including such notables as the europallet system (now EPAL) in Europe, the GPC (later GMA) pool in the United States, and the now-defunct Canadian Pallet Council (CPC) in Canada. Enduringly successful pooling providers also emerged in Australia in the years that followed World War 2.
Today, pallet pools play an important role in some supply chains, notably fast-moving consumer goods (FMCG) supply chains.
Benefits of Pallet Pooling
Pallet pooling is a form of equipment pooling, itself a particular approach to equipment management. As in other forms of equipment pooling, pooled pallets are shared among participants. Companies ship pool pallets to other locations where they are reused or shipped empty to another pool participant or intermediary.
Pallet pooling offers several benefits to users. The reuse of pooled pallets helps to reduce the need to manufacture new pallets, generally resulting in a lower cost per trip than a single-use pallet. Additionally, they are typically designed with durability in mind. A modest increase in pallet cost can result in a generous payback in increased pallet life.
Quality assurance is another important feature of pallet pooling. Typically, there is a standard size or a range of standard sizes, and there will be a prescribed specification that new and repaired pallets are expected to meet.
By belonging to a pool, companies can enjoy the benefits of the pool’s quality assurance program to help promote safe material handling in their operations.
As mentioned above, pallet pooling supports circular economy aspirations through an emphasis on the sharing of long-lasting pallets that can be reused, repaired, re-manufactured, and when no longer usable; reduced to wood fiber for other applications. Such an approach helps to eliminate CO2 by avoiding the need to manufacture new pallets and the frequency of end-of-life pallet recycling.
Pallet Pooling Models
There are various approaches to pooling. In North America, two particularly visible examples in the FMCG sector are 3rd party rental and the GMA common pool.
Third-party rental (similar to pallet hire in other parts of the world) providers rent pallets to users, typically on a per-use basis. Pallet rental is dominated by a handful of large companies that require massive pallet inventories and a large retrieval network.
There are also smaller rental providers, however, that provide custom solutions to less complex supply chains featuring fewer “ship-to” locations. Rental participants can benefit by enjoying the use of a premium quality pallet at a lower cost than purchasing a new pallet. Providers provide mechanisms to remove unneeded empty pallets after they have been unloaded.
Another leading model is the common pool. It features a commonly accepted standard, but without formal oversight or management at the pool level.
In the case of the GMA or 48×40”, refurbished pallets are readily available in the marketplace. While quality assurance is not officially regulated, the competitive nature of the marketplace requires attention to a general consensus of quality assurance standards.
One bonus of the common pool is that participants are less restricted as to where the pallets can be shipped. Additionally, a ready demand for accumulations of empty pallets exists in most markets to alleviate empty pallet accumulation.
There are other models. In many instances, companies have their own pallet inventories that are shared among company locations and regular trading partners. These may be managed by the company owning the pallets, or through a third-party management service.
Another type of model, more prominent in Europe, is the industry cooperative approach. In the cooperative approach, pallets are generally owned by an industry-supported not-for-profit to provide pallets to industry participants.
There is also a third-party association regulatory approach, such as provided by EPAL. The regulatory group creates specifications for the manufacture and repair of pallets. The pallets are owned by participants, however, who are free to transfer ownership to trading partners or exchange, according to their needs.
These are just examples of pooling models, and the list is by no means exhaustive. Some supply chains will require unique variations to provide the best solution in terms of value, quality assurance and environmental gains for their particular needs.
Pooling, however, is widely practiced in a variety of ways, and a circular solution to your pallet requirements might be closer at hand than you might imagine. Why not contact an NWPCA, CWPCA or WPA member company today to explore how pallet pooling could work in concert with your company’s strategic aspirations.