Innovation Moves from Structure to Elements of Distribution: the Discovery of Pallets

By | 24/08/2015

Innovation Moves from Structure to Elements of Distribution: the Discovery of Pallets

 

Innovation in corporate logistics takes place in a great variety of areas. Its instances are concerned with a lot of programs for logistical innovation such as mechanization of unloading and packaging, the use of bar code in inventory management, the RFID-based innovation of terminal operating system, and the application of pallets as the basis for transport innovation. Of course, these partial improvements combine to achieve overall development.

 

There were a lot of efforts in the past to change distribution structure. Doubtless, a complex distribution channel structure is costly. While common distribution proceeds through producer, wholesaler, retailer, and consumer, international logistics adds exporter, transporter, and importer in the middle. And the costs thereby incurred sometimes run up to 41.8% of consumer price. For this reason, most companies that have achieved supply chain innovation have put in efforts to bring about change to the distribution channel structure. Yet, one single instance of innovation that has changed the elements of distribution is the discovery of pallets. This means that it has been not about innovating a process of distribution but about changing the distribution process itself through standardization and creation of a process.

Now, it is a self-evident story but an application of pallets that is good enough to make it easy to carry products with a forklift greatly reduces transport cost. It is because one single standard can cover a full lineup of maritime, land, and air operation that stretches from producer to exporter, importer customs clearance, transporter, storage, and retailer.

 

Types of pallet, an essential item for automated logistics

A pallet is a loading frame that has a surface for carrying goods organized in a specified quantity for unloading, transport, and storage and an opening that can be used by a forklift. Here, ‘organizing goods in a specified quantity’ means organizing goods in specified units by fixing up certain numbers, weights, or volumes. And pallet types are divided into flat, box, and post pallets.

(1) Flat pallet: Most widely used, a flat pallet uses either single side or both sides. Pallets in the past were mainly used by companies, and as they were rarely considered for usage outside specific companies, they registered all different sizes, structures, and strengths according to user convenience and their types varied greatly. Accordingly, it not only causes a rise in the manufacturing cost for pallets but also jeopardizes compatibility among pallets adopted by different companies, thus creating hurdles in rationalization of logistics.

(2) Box pallet: It looks like a box placed on top of a flat pallet. So, a box pallet is used for packaged goods or to combine different goods. For example, box pallets are frequently used to warehouse or transport parts in factories, or lately, for truck delivery from distribution centers to department stores or supermarkets. And box plates come in different kinds: load bearing surface is fenced around with steel wire mesh or steel pipes, or in a fixed form or with bent stuff. One demerit for box plates is that they are expensive and heavy, while they do not have a large loading capacity.

(3) Post pallet: Posts are fixed on the four corners of a pallet, which can sustain a lot of pressure applied from above. Posts are fixed, detachable, or bendable.

 

wood pallet_innovation of distribution

wood pallet_innovation of distribution

 

Pallets designed to realize Unit Load System (ULS)

Sure, different countries have slightly different standards for pallets. Korea and Japan adopt 1100×1100. The size is meant to ensure efficiency involving pallets being loaded into vehicles. China uses 1100×1100 and 1000 x 1200 most frequently. In contrast, the European standard is 1200mmx800mm. And this is designed to realize ULS (Unit Load System). Unit Load System, which consists in unloading, delivering, or transporting cargoes with a mechanical force while ensuring consistency by unitizing goods in terms of a standard weight or volume, aims to conduct efficient mobility for cargoes by rationalizing unloading and systematizing unloading and transport. Therefore, Unit Load System is referred to as a leader in the systematization of physical distribution, and characteristically conducts it by creating consistent and optimized units from its start to end.

Europe sticks to its standard for pallet size (1200×800), because a pallet moves straight to ordinary retail shops.  As you may have seen in a previous article, the Netherlands thrives in floricultural logistics. The Dutch floricultural distribution is one single fine example that explains the European pallet size. It’s not that flowers are delivered in bulk distribution, but that pallets full of flowers are dropped off with hand trucks to those flower shops where flowers wait for customers. So, we can say that this is even closer to the complete rendition of the ULS concept.

 

TTI Algeciras terminal in which OPUS Terminal TOS is in operation

TTI Algeciras terminal in which OPUS Terminal TOS is implemented

Merits and demerits of Unit Load System can be summarized as below.

- Damage, pollution, and loss prevented during unloading.

- Reduced wait time for means of transportation.

- Packaging cost reduced by simple packaging.

- Convenient goods inspection with added costs for containers or pallets.

- Storage efficiency decreased due to the volume of pallets.

- Additional unloading equipment needed.

- Spacious open-air storage needed to ensure forklift operation.

 

 

Future of pallet: eco-friendly green transport

 

plastic pallet innovation

plastic pallet innovation

Pallet logistics is facing a new issue. It is environmental pollution. Increased trade volume from industrialization has increased fossil fuel consumption, thus accelerating global warming. And the increased use of wooden pallets, which came out for innovation in distribution, has resulted in increased damage to the worldwide forest resources. And trade and transport in the wake of industrialization have become interlocked with environmental questions.

 

For these reasons, pallets are transitioning from wood to plastic with a view to an eco-friendly logistic innovation. One report shows 51.7% of those surveyed prefer plastic for material of their pallets while 27.5% prefer wood, thus indicating that plastic registers 46.5% more than wood in preference. This shows reversal from the early part of the first decade of the new millennium when wood was preferred by 56% while plastic was preferred by 39%.

 

Wooden pallets, which registered greater preference as they were available at more reasonable prices and in more diverse standards, are used less and less as timber prices go up sharply and they register increasingly vulnerable durability and convenience. Especially, pallets for use on the premises tend to prefer plastic as they are frequently used for outdoor storage or delivery. With semi-permanent durability and service life, plastic registers greater preference compared to wood despite its high price.

The trend in eco-friendly logistics avoids road transport, which causes relatively severe pollution, prefers to use ships or trains to carry out one-time delivery through sharing and/or integrating.

 
 
 
 

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