Susan Lacefield has been working for supply chain publications since 1999. Before joining DC VELOCITY, she was an associate editor for Supply Chain Management Review and wrote for Logistics Management magazine. She holds a master's degree in English.
For years the debate has raged in the pallet industry: Which is better, wood or plastic? As recently as five years ago, the answer could be boiled down to which was more cost-effective for a particular company's operations. But then Wal-Mart came out with a scorecard that rated its suppliers on the sustainability of their packaging, and suddenly it seemed that the question everyone was asking was: Which is greener, plastic or wood?
It's an easy question to ask, but a hard one to answer. To make the assessment, experts say, you really have to consider the pallet's entire life cycle from cradle to grave. Here are some of the key points to consider:
• How eco-friendly is the raw material? Wood pallets are made from lumber, a renewable resource, whereas plastic pallets are made from high-density polyethylene (HDPE), which is created from petroleum or natural gas. While this simple fact would seem to favor wood, some pallet companies say it's actually more complicated than that.
For example, Bob Moore, president of iGPS (Intelligent Global Pooling Systems), a plastic pallet pooler, acknowledges that plastic pallets are created from a nonrenewable resource, but he points out that the plastic used to create iGPS's pallets does not come from oil but from a resin created from natural gas. This resource, according to Moore, is so plentiful that Saudi Arabian oil refineries used to burn it off as part of the refining process. Furthermore, iGPS contends, the environmental impact of plastic pallets can be greatly reduced merely by incorporating 15 percent recycled HDPE into the pallets.
While using a nonrenewable resource like oil or natural gas to create plastic pallets has a considerable impact on the environment, so too does cutting down a tree. "I've read statistics from the U.S. Forest Service and Department of Agriculture that we cut down almost 40 percent of our hardwood in this country for single-use pallets," says Terry Tamminen, former secretary of the California Environmental Protection Agency and a member of the iGPS board of directors. "That's the very height of unsustainability."
But Bruce Scholnick, president of the National Wooden Pallet and Container Association (NWPCA), disputes that claim. "It's a total misconception that trees are destroyed merely to make a pallet," he says. Instead, trees are cut down for such things as building materials and furniture. The lumber that is left over is then used to make a pallet.
Furthermore, he says, most pallet companies are actively involved in managed forestry, which encourages reforestation and helps reduce carbon emissions over time. "In fact," says Scholnick, "there are more trees today than at any time in the last 80 years because of managed forests."
But reforestation is no instant fix, says Moore. "You can say that for every one tree that you cut down, you plant 10 more, but the fact is that you aren't planting 40-foot trees that consume 45 pounds of carbon dioxide a year," he argues."Instead,you're planting two-inch seedlings that will actually consume environmental resources for a decade."
• How much energy is consumed in making the pallet? On this, both camps can agree: Wood has the advantage over plastic when it comes to the manufacturing process. In fact, plastic pallets require five times more energy to source, process, and manufacture than wood pallets do, says Derek Hannum, director of marketing for pallet pooler CHEP. Manufacturing plastic also produces more emissions, according to Scholnick."The carbon dioxide (CO2) emissions from creating plastic are infinitely higher than the CO2 emissions from cutting the wood and making lumber," he says.
• How durable is the pallet? Most experts agree that plastic pallets last longer and can be used for more trips than wood ones, reducing the amount of raw materials consumed. For example, iGPS estimates that one of its plastic pallets will make 100 trips in its lifetime. By contrast, the company says, a wooden pallet used in a pool lasts for only 20 trips, and a single-use pallet might be used for as few as two trips. Both CHEP and the NWPCA, however, say that the iGPS numbers grossly underestimate the number of trips a wood pallet can make in its lifetime.
• How much does it weigh? Plastic pallets weigh only about half as much as wood pallets do, which has important implications for transportation. For companies that use 48- by 40-inch Grocery Manufacturers Association (GMA) standard pallets, says Moore, using plastic pallets can shave anywhere from 500 to 2,000 pounds off a trailerload's weight. "Less weight means less diesel fuel," he adds, "which means a smaller carbon footprint."
• Can the pallet be repaired? Plastic may last longer on average than wood, but wood pallets are easier to repair. "You just pull a board out and nail another one in," says Scholnick. That allows you to extend the life of the pallet for quite a number of years, adds Hannum.
It used to be that plastic pallets weren't repairable and had to be recycled if damaged. But that's beginning to change. Plastic pallet makers have recently introduced models that are designed to be repairable, and CHEP is looking into introducing repairable plastic pallets into its pool in the United States.
Although repairing a wooden pallet does extend its life, Michal Pelzig of the consulting firm Environmental Resource Management (ERM) says you still have to factor in the fuel consumed and emissions created by transporting damaged pallets to repair locations. CHEP, however, says it has gotten around that problem by locating 80 repair service centers across the nation. This allows the company to repair the pallets close to where its customers use them, says Hannum.
• Can the pallet be recycled? Wood is 100 percent recyclable, says Hannum. When a pallet can no longer be repaired, a recycler can grind it up to be used for alternative products, like mulch and animal bedding. CHEP's service centers are even experimenting with using wood waste to create fuel. Plastic pallets are also recyclable. When an iGPS pallet is damaged, for example, it is ground down, and the resulting plastic is reused to make a new pallet (although Moore says that the damage rate is so low—0.003 percent—that the company doesn't have many damaged pallets to draw from yet).
Scholnick, however, notes that there's an environmental cost to recycling plastic pallets. Even if you assume that plastic can be ground up or melted down and reused, he says, you have to account for the energy required to remanufacture that plastic pallet.
• Are there eco-friendly options for disposal? Even the proponents of plastic pallets concede that disposal can be tricky. Unlike wood, which is biodegradable, plastic has a long half-life and when it does start to decompose, it emits methane gas. For plastic pallets to be sustainable, says Moore, the user has to have reverse logistics processes in place to ensure that the pallets don't end up being thrown out. Operations that don't have those sorts of controls would be better served by using wood pallets, he admits.
Although wood pallets may not pose the same landfill hazards their plastic counterparts do, wood pallet waste is still considered a significant problem. For example, one study found that 6.16 million tons of wood pallets (or 223.6 million pallets) entered municipal solid waste and construction and demolition landfill facilities in 1995. Scholnick, however, argues that those figures are dated and do not reflect current practice. Today, most pallets are picked up by a pallet recycler rather than being dumped in a landfill, he says. And even if the pallet does end up in a landfill, chances are good that it will ultimately be recycled. "It's too valuable," Scholnick says. "Even nails are remelted."
Landfill disposal, however, may not be an option in the future. A number of states and municipalities are cracking down on the practice. For example, starting in October 2009, North Carolina will prohibit the disposal of wooden pallets in its municipal solid waste landfills.
Running the numbers
Given all these complex considerations, how can you make an accurate, nonbiased assessment of which material is more sustainable? Is it even possible to weigh the impact of using nonrenewable material to make plastic pallets against the extra fuel burned to transport the heavier wooden pallets?
It used to be that any such judgments were made solely on a qualitative basis, says Pelzig of ERM. But for the past five years, researchers have been honing a tool called a lifecycle assessment (LCA), which tries to quantitatively assess the environmental impact of a product over its lifetime. Standardized under ISO 1440 guidelines, LCAs consider factors such as how much solid, liquid, and gaseous waste is generated at each stage of a product's life.
A number of pallet makers have already commissioned assessments of their products. iGPS, for example, hired ERM to conduct life-cycle assessments of the iGPS plastic pooled pallets as well as wooden pooled pallets and single-use wood pallets. The study results, which were published in August 2008 and can be viewed on the iGPS Web site, found that the iGPS plastic pallet had a lower environmental impact than its wood counterparts in all categories assessed.
CHEP, too, has commissioned one of these studies, according to Hannum. Its study, conducted by environmental consulting firm Franklin Associates, compared the pallets used in CHEP's pallet pool system to one-way pallets, pallets used in pallet exchanges, and slipsheets. Using data from the study, CHEP created the CHEP Calculator tool, now posted on its sustainability Web site, which calculates how much a company will save in solid waste, energy consumption, and greenhouse gas emissions by switching to CHEP pallets.
The study, however, did not look at plastic pallets. Although CHEP does use plastic pallets in its U.S. operations, it uses them only in a closed-loop environment. The company elected not to include plastic units in its study because it felt that performance data gathered from pallets used in closed-loop applications might not be valid for pallets used in an open pool.
Although pallet makers have made marketing hay with their LCAs, Scholnick of the NWPCA remains skeptical of all the assessments that he has seen, saying that they are all based on flawed data. In particular, he argues that the deciding factor in most of the studies—the number of trips a pallet can make in its lifetime—is based on assumptions. "And that's totally unfair," says Scholnick. He says that the "number of trips" standard fails to take into account the resiliency of wood pallets. If a plastic or metal pallet is run over by a truck its first time out, for example, it will likely have to be written off as a total loss, he says, but wood pallets can be continuously repaired and reused.
Tamminen, too, urges companies to view these assessments with caution. He recommends having all LCAs evaluated by your environmental health and safety personnel to make sure the data comes from reputable sources and that the analysis doesn't exclude any stages of the life cycle or define the life cycle too narrowly.
Green vs. gold
For all the controversy it's stirring up, it's unclear how much effect the great wood vs. plastic debate will ultimately have on the industry. In fact, some observers say that end users aren't even all that concerned about their pallets' sustainability. Scholnick, for example, maintains that while Wal- Mart may be emphasizing eco-friendly packaging, for most other companies, it's a secondary, or even tertiary, concern. "Other customers with whom I speak, they're not talking about sustainability," he says. "They're looking for the most cost-effective option that they are certain will get their product safely from point A to point B. That's what they're looking for."
Others say customers are genuinely interested in being green, but only if the economics are there. "Customers need a sustainable but also an economically viable option," says Hannum. "And so, the economics of it are still the primary consideration. Does it offer performance for the cost that I need?"
Congestion on U.S. highways is costing the trucking industry big, according to research from the American Transportation Research Institute (ATRI), released today.
The group found that traffic congestion on U.S. highways added $108.8 billion in costs to the trucking industry in 2022, a record high. The information comes from ATRI’s Cost of Congestion study, which is part of the organization’s ongoing highway performance measurement research.
Total hours of congestion fell slightly compared to 2021 due to softening freight market conditions, but the cost of operating a truck increased at a much higher rate, according to the research. As a result, the overall cost of congestion increased by 15% year-over-year—a level equivalent to more than 430,000 commercial truck drivers sitting idle for one work year and an average cost of $7,588 for every registered combination truck.
The analysis also identified metropolitan delays and related impacts, showing that the top 10 most-congested states each experienced added costs of more than $8 billion. That list was led by Texas, at $9.17 billion in added costs; California, at $8.77 billion; and Florida, $8.44 billion. Rounding out the top 10 list were New York, Georgia, New Jersey, Illinois, Pennsylvania, Louisiana, and Tennessee. Combined, the top 10 states account for more than half of the trucking industry’s congestion costs nationwide—52%, according to the research.
The metro areas with the highest congestion costs include New York City, $6.68 billion; Miami, $3.2 billion; and Chicago, $3.14 billion.
ATRI’s analysis also found that the trucking industry wasted more than 6.4 billion gallons of diesel fuel in 2022 due to congestion, resulting in additional fuel costs of $32.1 billion.
ATRI used a combination of data sources, including its truck GPS database and Operational Costs study benchmarks, to calculate the impacts of trucking delays on major U.S. roadways.
There’s a photo from 1971 that John Kent, professor of supply chain management at the University of Arkansas, likes to show. It’s of a shaggy-haired 18-year-old named Glenn Cowan grinning at three-time world table tennis champion Zhuang Zedong, while holding a silk tapestry Zhuang had just given him. Cowan was a member of the U.S. table tennis team who participated in the 1971 World Table Tennis Championships in Nagoya, Japan. Story has it that one morning, he overslept and missed his bus to the tournament and had to hitch a ride with the Chinese national team and met and connected with Zhuang.
Cowan and Zhuang’s interaction led to an invitation for the U.S. team to visit China. At the time, the two countries were just beginning to emerge from a 20-year period of decidedly frosty relations, strict travel bans, and trade restrictions. The highly publicized trip signaled a willingness on both sides to renew relations and launched the term “pingpong diplomacy.”
Kent, who is a senior fellow at the George H. W. Bush Foundation for U.S.-China Relations, believes the photograph is a good reminder that some 50-odd years ago, the economies of the United States and China were not as tightly interwoven as they are today. At the time, the Nixon administration was looking to form closer political and economic ties between the two countries in hopes of reducing chances of future conflict (and to weaken alliances among Communist countries).
The signals coming out of Washington and Beijing are now, of course, much different than they were in the early 1970s. Instead of advocating for better relations, political rhetoric focuses on the need for the U.S. to “decouple” from China. Both Republicans and Democrats have warned that the U.S. economy is too dependent on goods manufactured in China. They see this dependency as a threat to economic strength, American jobs, supply chain resiliency, and national security.
Supply chain professionals, however, know that extricating ourselves from our reliance on Chinese manufacturing is easier said than done. Many pundits push for a “China + 1” strategy, where companies diversify their manufacturing and sourcing options beyond China. But in reality, that “plus one” is often a Chinese company operating in a different country or a non-Chinese manufacturer that is still heavily dependent on material or subcomponents made in China.
This is the problem when supply chain decisions are made on a global scale without input from supply chain professionals. In an article in the Arkansas Democrat-Gazette, Kent argues that, “The discussions on supply chains mainly take place between government officials who typically bring many other competing issues and agendas to the table. Corporate entities—the individuals and companies directly impacted by supply chains—tend to be under-represented in the conversation.”
Kent is a proponent of what he calls “supply chain diplomacy,” where experts from academia and industry from the U.S. and China work collaboratively to create better, more efficient global supply chains. Take, for example, the “Peace Beans” project that Kent is involved with. This project, jointly formed by Zhejiang University and the Bush China Foundation, proposes balancing supply chains by exporting soybeans from Arkansas to tofu producers in China’s Yunnan province, and, in return, importing coffee beans grown in Yunnan to coffee roasters in Arkansas. Kent believes the operation could even use the same transportation equipment.
The benefits of working collaboratively—instead of continuing to build friction in the supply chain through tariffs and adversarial relationships—are numerous, according to Kent and his colleagues. They believe it would be much better if the two major world economies worked together on issues like global inflation, climate change, and artificial intelligence.
And such relations could play a significant role in strengthening world peace, particularly in light of ongoing tensions over Taiwan. Because, as Kent writes, “The 19th-century idea that ‘When goods don’t cross borders, soldiers will’ is as true today as ever. Perhaps more so.”
Hyster-Yale Materials Handling today announced its plans to fulfill the domestic manufacturing requirements of the Build America, Buy America (BABA) Act for certain portions of its lineup of forklift trucks and container handling equipment.
That means the Greenville, North Carolina-based company now plans to expand its existing American manufacturing with a targeted set of high-capacity models, including electric options, that align with the needs of infrastructure projects subject to BABA requirements. The company’s plans include determining the optimal production location in the United States, strategically expanding sourcing agreements to meet local material requirements, and further developing electric power options for high-capacity equipment.
As a part of the 2021 Infrastructure Investment and Jobs Act, the BABA Act aims to increase the use of American-made materials in federally funded infrastructure projects across the U.S., Hyster-Yale says. It was enacted as part of a broader effort to boost domestic manufacturing and economic growth, and mandates that federal dollars allocated to infrastructure – such as roads, bridges, ports and public transit systems – must prioritize materials produced in the USA, including critical items like steel, iron and various construction materials.
Hyster-Yale’s footprint in the U.S. is spread across 10 locations, including three manufacturing facilities.
“Our leadership is fully invested in meeting the needs of businesses that require BABA-compliant material handling solutions,” Tony Salgado, Hyster-Yale’s chief operating officer, said in a release. “We are working to partner with our key domestic suppliers, as well as identifying how best to leverage our own American manufacturing footprint to deliver a competitive solution for our customers and stakeholders. But beyond mere compliance, and in line with the many areas of our business where we are evolving to better support our customers, our commitment remains steadfast. We are dedicated to delivering industry-leading standards in design, durability and performance — qualities that have become synonymous with our brands worldwide and that our customers have come to rely on and expect.”
In a separate move, the U.S. Environmental Protection Agency (EPA) also gave its approval for the state to advance its Heavy-Duty Omnibus Rule, which is crafted to significantly reduce smog-forming nitrogen oxide (NOx) emissions from new heavy-duty, diesel-powered trucks.
Both rules are intended to deliver health benefits to California citizens affected by vehicle pollution, according to the environmental group Earthjustice. If the state gets federal approval for the final steps to become law, the rules mean that cars on the road in California will largely be zero-emissions a generation from now in the 2050s, accounting for the average vehicle lifespan of vehicles with internal combustion engine (ICE) power sold before that 2035 date.
“This might read like checking a bureaucratic box, but EPA’s approval is a critical step forward in protecting our lungs from pollution and our wallets from the expenses of combustion fuels,” Paul Cort, director of Earthjustice’s Right To Zero campaign, said in a release. “The gradual shift in car sales to zero-emissions models will cut smog and household costs while growing California’s clean energy workforce. Cutting truck pollution will help clear our skies of smog. EPA should now approve the remaining authorization requests from California to allow the state to clean its air and protect its residents.”
However, the truck drivers' industry group Owner-Operator Independent Drivers Association (OOIDA) pushed back against the federal decision allowing the Omnibus Low-NOx rule to advance. "The Omnibus Low-NOx waiver for California calls into question the policymaking process under the Biden administration's EPA. Purposefully injecting uncertainty into a $588 billion American industry is bad for our economy and makes no meaningful progress towards purported environmental goals," (OOIDA) President Todd Spencer said in a release. "EPA's credibility outside of radical environmental circles would have been better served by working with regulated industries rather than ramming through last-minute special interest favors. We look forward to working with the Trump administration's EPA in good faith towards achievable environmental outcomes.”
Editor's note:This article was revised on December 18 to add reaction from OOIDA.
A Canadian startup that provides AI-powered logistics solutions has gained $5.5 million in seed funding to support its concept of creating a digital platform for global trade, according to Toronto-based Starboard.
The round was led by Eclipse, with participation from previous backers Garuda Ventures and Everywhere Ventures. The firm says it will use its new backing to expand its engineering team in Toronto and accelerate its AI-driven product development to simplify supply chain complexities.
According to Starboard, the logistics industry is under immense pressure to adapt to the growing complexity of global trade, which has hit recent hurdles such as the strike at U.S. east and gulf coast ports. That situation calls for innovative solutions to streamline operations and reduce costs for operators.
As a potential solution, Starboard offers its flagship product, which it defines as an AI-based transportation management system (TMS) and rate management system that helps mid-sized freight forwarders operate more efficiently and win more business. More broadly, Starboard says it is building the virtual infrastructure for global trade, allowing freight companies to leverage AI and machine learning to optimize operations such as processing shipments in real time, reconciling invoices, and following up on payments.
"This investment is a pivotal step in our mission to unlock the power of AI for our customers," said Sumeet Trehan, Co-Founder and CEO of Starboard. "Global trade has long been plagued by inefficiencies that drive up costs and reduce competitiveness. Our platform is designed to empower SMB freight forwarders—the backbone of more than $20 trillion in global trade and $1 trillion in logistics spend—with the tools they need to thrive in this complex ecosystem."