No surprise, two of the biggest things to consider when working with a pallet broker are experience and reputation. This lesson was instilled early in the career of Jon Kearney, now director of vendor management at Ongweoweh, a major U.S. pallet broker. On one of his first road trips for Ongweoweh, visiting pallet suppliers in the Northeast, it seemed like every company he met, particularly pallet recyclers, mentioned a certain broker who had purchased pallets and not paid.
“I heard this same company’s name over and over, across a lot of different states,” recalled Kearney. “I don’t hear that company’s name anymore,” he reflected. “Word of mouth probably caught up with him.”
For some people, the idea of working with a broker might seem like just adding an extra margin to the cost of a pallet, but broker relationships can be advantageous for pallet buyers and pallet supplier partners alike in many circumstances. In this column, we look at those benefits and offer insider perspectives on choosing the best broker for your needs.
Let’s start with the benefits for pallet buyers:
Deep understanding of prices and the market:
Knowledgeable pallet brokers have extensive knowledge of market prices and trends. They constantly negotiate with pallet suppliers across the country, allowing them to provide buyers with accurate pricing information and guidance on their pallet expenditures.
Time and cost savings:
By leveraging their market expertise, pallet brokers can find lower-cost options for buyers, even sourcing pallets from more distant suppliers. This saves buyers valuable time and resources that would otherwise be spent on supplier research.
Leading pallet brokers offer online visibility to procurement teams, providing access to critical information such as pricing, inventory, delivery times and market trends. This transparency helps buyers make informed decisions and better manage their pallet procurement.
Working with a broker reduces the risk for pallet buyers. The broker’s deep industry experience and comprehensive supplier network mean that options are usually readily available.
Of course, for a broker relationship to work, there must also be benefits for pallet suppliers. Such benefits include:
Supplementing sales force:
Pallet brokers can generate sales for pallet suppliers without the need to invest in additional sales personnel or pay sales commissions. Many pallet companies rely on brokers to increase sales and expand their customer base.
Many pallet brokers operate nationally, providing suppliers with opportunities to bid on pallet requirements from local branches of multi-site companies. This expands the supplier’s market reach and enables them to access new business opportunities.
Pallet brokers maintain partnerships with pallet companies nationwide, allowing them to gather market insights and competitive pricing information. This information is shared with local pallet companies, helping them find the right balance between sales volume and profitability.
Pallet brokers may leverage their logistics expertise to sell pallets in areas beyond the traditional market boundaries. By tapping into affordable freight lanes, brokers can sell pallets further from home, opening up new supplier sales opportunities.
Slow payment is a particular concern during economic downturns. Working with a reputable broker ensures prompt payment, alleviating the burden on the supplier’s sales and administration staff. This reduces collection concerns and helps maintain a healthy cash flow.
With many brokers to work with, which is the right fit for you? “Brokers just pop in and out of the market all the time,” cautioned Glenn Merritt, president and CEO of First Alliance Logistics Management (FALM).
“Some brokers change suppliers like you and I would change socks,” he added. “To them, it’s just about getting the deal in hand and moving on, so there’s not a lot of loyalty there. But they can’t last with this approach too long and get away with it.”
Other questionable practices Merritt has seen from some brokers include doubling up on margins. “Some brokers sell through other brokers and apply two or more margins,” he said. “In my opinion, this practice is unethical as it raises the customer’s price.” Only strong relationships endure.
By establishing a strong trust-based relationship, a broker can effectively become the pallet buyer for a company, bringing deep industry knowledge and reach to the client. It allows the client’s procurement team to focus on other challenges while knowing the pallet buying function is in good hands.
“Broker longevity and experience are the biggest things,” agreed Kearney. He noted that Ongweoweh has been in business since 1978. FALM has been serving customers since 1995.
“When you deal with new companies that are popping up, you never know what you’re going to get,” he continued. “Are they good? Are they going to last? Do they have the capital backing behind them? Do they have the reach and the capabilities? There’s just so much unknown.”
Talking to Merritt and Kearney, the focus is clearly on maintaining strong ties with both pallet customers and pallet supplier partners to sustain those relationships over the long haul. Those bonds are built upon clear communication, mutual respect and trust. Ongweoweh, for example, operates on core values it calls RISA, which stands for Respect, Integrity, Stewardship and Accountability.
Both men emphasized the importance of the broker having the necessary information systems to support those relationships. “Systems are one of the top benefits of dealing with the manufacturer’s rep or a broker like us,” Merritt said. That system can give clients visibility into shipment and inventory information, debits and credits, and more. Customers are increasingly hungry for data.
Another emerging aspect of reporting is the growth of ESG (Environmental, Social and Governance) information requirements for pallet buyers. It has become an important consideration, Kearney noted. “A lot of customers are looking for information regarding ESG,” he said. “They want to know what pallet companies are doing besides selling pallets.” For example, they may want to know how pallet suppliers are helping out in their community. Do the core values of the pallet manufacturer align with the pallet buyer’s core values? “There’s a lot to it,” he continued.
Kearney also cautioned pallet buyers to consider overall value rather than just pallet price. A skilled management company, such as Ongweoweh, can review the pallet specification. Perhaps the pallet could be redesigned, or maybe recycled would work instead of new. If a company has mold issues, they can make recommendations, such as switching from green pine to KD material.
The bottom line is that broker relationships can be valuable for clients and fill needs for pallet suppliers. But as Kearney and Merritt caution, not all brokers are created equal. Look for experience and reputation when searching for a pallet partner.