- By First Alliance Logistics Management
- April 20, 2022
- Buying Pallets
Buying pallets? Here are some tips of buying vs renting, stringer vs block, and ISPM-15 treatment vs mold treatment.
In my first coverage of the Ultimate Guide to Buying Pallets, we discussed three considerations for procurement personnel, including new pallets versus used, softwood versus hardwood, and pallet pricing. Let’s look at three other topics of interest for the prospective pallet purchaser, those being pallet rental versus purchase, 2-way versus 4-way pallets, and ISPM-15 pallet treatment versus mold treatment.
1. Pallet rental vs. pallet purchase
Pallet rental has become commonly employed, particularly in the fast-moving consumer products sector, although many supply chain decision-makers still prize 48×40 whitewood pallets. Here are some of the respective benefits of each offer.
Benefits of Pallet Rental
- Pay per use versus paying for the entire cost of buying pallets results in a lower upfront cost for similar or better quality
- Pallet inventory can be flexed to meet seasonal surges, which can affect pallet pricing, eliminating the requirement to hold unneeded inventory during the slow season
- Easier to budget, less susceptibility to lumber pricing volatility than buying pallets each time
- Cheaper freight rates than for pallet programs involving exchange or backhaul
- Rental pallet usage may be a customer requirement, and as such, usage of the rental pallet is a benefit in achieving customer compliance.
Rental programs also often cite advantages related to higher, more consistent pallet quality, resulting in improved material handling efficiency, reduced product damage, and enhanced worker safety. Note, however, that these quality benefits aren’t a result of the pallet rental model, per se, but due to having a robust quality control program. Pallet purchase programs can also benefit from superior quality assurance programs. So whether you are considering renting or buying, be sure to vet the quality assurance process.
Benefits of Buying Pallets
Custom design options. One key benefit of buying pallets is that they can be custom-ordered to the required specification, rather than being forced to utilize the limited options offered by rental companies – such as 48×40″ pallets or half pallets.
No surprising fees or charges. Some pallet rental providers have fairly complex billing formulae, which may include, for example:
- Issue Fee
- Transfer Fee
- Non-Participant Fee (not all rental companies charge this)
- Heat-Treating Fee
- Lost Pallet Fee
Cost reduction opportunity in closed loops: While rental programs boast a lower upfront cost than buying pallets, it is possible to reduce pallet costs lower than rental through effectively managed closed-loop pallet programs involving high-quality pallets.
Supply flexibility. Remember last year when shock waves rippled across the supply chain when rental providers could not supply some of their customers? Because buyers can purchase pallets from multiple suppliers, it is easy to set up multiple vendors to reduce the risk of a single supplier service failure.
Usage and revenue opportunities for the receiver. When shipping purchased pallets one-way, the receiver is free to reuse them once they are emptied, or, if they are a popular size, they have the potential to sell them.
2. 2-way vs 4-way, block vs stringer
Simply speaking, 2-way and 4-way pallets refer to the pallet’s functionality for material handling direction of entry by material handling equipment. Block and stringer pallet types, however, refer to fundamental differences in structural design.
A 2-way pallet, for example, will have solid stringers and will only be accessible from the two end openings. A partial 4-way entry pallet has notches in the stringers to allow forklift entry from the stringer side, but which can only facilitate pallet jack entry from the ends. A full 4-way entry pallet allows pallet jack and forklift entry from all four sides. Full 4-way entry pallets are typically (but not always) block pallets.
As the names suggest, the top and bottom deck of a stringer pallet are separated by stringers. In the case of the block pallet, a combination of blocks and stringer boards creates the opening between top and bottom deck. Both stringer and block pallets can be designed for critical performance and durability applications.
Block pallets are typically more expensive relative to stringer pallets due to a more complex manufacturing process. However, the ease of pallet entry and handling makes 4-way entry block pallets prized in a variety of supply chain settings. They are a requirement for Costco, for example.
3. ISPM-15 pallet treatments vs. mold treatment
When pallet vendors refer to pallet treatment, they commonly refer to treatments to make pallets compliant with ISPM-15. The ISPM-15 stamp is required for pallets shipped from the U.S. to countries other than Canada. ISPM-15 was designed to prevent the further spread of wood-borne pests that can colonize and damage forests abroad. For this reason, ISPM-15 compliance is required by many countries internationally. Failure to comply can lead to fumigation costs or denial of entry in the destination country.
In the United States and Canada, ISPM-15 compliance is achieved through heat treatment of pallet components before pallet assembly or the completed pallet. You can receive compliant pallets built from compliant kiln-dried lumber. Green, untreated material can also be used to produce pallets, which are then placed in a heat treatment chamber until the heat requirements are met. It is essential to source ISPM-15 pallets only from approved facilities to avoid potential issues at foreign ports of entry.
Some pallet buyers make the mistake of thinking that heat-treated pallets will be less subject to mold development. This perspective is not necessarily accurate. Pallets manufactured from kiln-dried material will be less susceptible to mold because they have a low moisture content. On the other hand, green pallets treated in an HT chamber may be more vulnerable to mold because the heating process wicks more moisture to the surface of the wood. Mold growth depends on moisture content and heat as well as oxygen and a food source (the wood).
There are, however, a variety of wood treatments available to inhibit mold growth. There are both FDA and non-FDA-approved treatments offered commercially, depending upon the application’s requirements. Ask your pallet vendor to find out more.
When it comes to buying pallets amid the changing demand, there are many things to consider in addition to buying vs renting, block vs stringer, and ISPM-15 treatment vs mold treatment. For a complete exploration, visit the Ultimate Guide to Buying Pallets, or call FALM today.