Are block pallets back in vogue?

In January 2011, Costco became the first retailer to require its suppliers to ship product on block pallets similar to the pallets available from CHEP, PECO and iGPS. Is the Costco requirement having an impact on the pallet market? That’s one of the questions Modern looked at in our annual pallet survey. The entire survey will be published in the November issue.

What did we learn? For one, less than 20% of respondents said they had been asked to switch the type of pallet they use for shipping by a customer. However, a fair number of our readers are already shipping some of their deliveries on block pallets. Of those who did switch, roughly a third switched to a block pallet. Here’s a little more detail.

First, although more than half (53%) of readers are shipping solely on stringer pallets, 47% ship some or all of their loads on block pallets, a design that is used by pallet pool operators such as CHEP, PECO and iGPS. Among that group of respondents, more than half are shipping to major retailers, including Walmart (33%), Costco (26%), a major grocery store chain (24%) and Sam’s Club (21%).

A significant percentage of all readers (82%) reported that no customer had required them to change the type of pallet they were using for shipments in the past year. However, nearly 19% reported that they had changed their pallet usage in response to a customer requirement.

Of those who have changed, 31% say they are using more block pallets and 54% say they are using alternatives to wooden pallets. More importantly, only 15% are using more stringer pallets in response to a customer requirement.

Asked what type of business is requiring them to change the type of pallet they are using, 41% responded that it was a retail customer, 34% a manufacturing customer and 26% a wholesale customer.

For now, Costco appears to be one of the few companies planning to require its suppliers to ship on block pallets. Only 3 readers indicated their company was considering a similar strategy.

Finally, we asked how interested were readers in using a pallet pooling service managed by the pallet industry as an alternative to established pools managed by CHEP, PECO and iGPS.

Roughly 14% indicated they were interested or highly interested. Sixty-six (66%) indicated that they were not very or not at all interested.

That could indicate that the pallet industry needs to do more work to educate readers on what it may offer and how they may benefit from a new pool.