New Lighter Pallets Reduce Import/Export Costs

There are two major criteria to consider when choosing the type of pallet to use for exporting and importing product: compliance and cost. What type of pallet does the recipient country and customer accept, and how much will pallets factor into the total

When decisions are being made about the best type of pallet to use for moving products internationally the devil is truly in the details. Is pallet price or weight or strength or regulatory compliance the most important criterion? Airfreight charges can be reduced using plastic pallets. Untreated wood pallets can carry alien insects that will find new homes in receiving countries. Pallets made of engineered wood are strong, are phytosanitary compliant and can carry heavy loads. And of course pallet size and style vary by geographic region.

Hewlett-Packard Company (Palo Alto, Calif., www.hp. com) determines the type of pallet or other load-handling material to use based on the mode of transportation. Slipsheets, for example, are used for sea containers because they give better cube utilization, allowing another layer of product to be put into containers.

HP ranks high on the list of companies that move product by airfreight. Airfreight costs are determined by the total weight of the shipment. The company is transitioning to a lighter plastic pallet that has high tensile strength for its airfreight loads, says Randy Boeller, package engineering manager at HP's Houston distribution hub. Even though the lightweight plastic pallets cost more than wood pallets, HP still saves money shipping its notebook computers palletized on plastic pallets from Asia to markets worldwide. However, plastic pallets are not a universal solution.

"Where it makes sense," Boeller explains, "we will change out pallets at a hub if that is what it takes to save money on the first leg of the trip and satisfy the customer on the last leg of the trip." For example, HP repalletizes notebooks on metric block pallets that its European customers will accept.

Dock workers also benefit from handling plastic pallets. They don't receive splinter or nail wounds and the lighter weight contributes to fewer back injuries. Another advantage of plastic pallets is that they can be reused, recycled or resold.

Airdex' (Las Vegas, www.airdex.com) makes the plastic pallet that HP uses for airfreight shipments. The pallet's core is super-compressed, molded EPS foam that is fused with a tough outer coating. The result is a seven-pound pallet that provides shock and vibration protection, thermal insulation, and a soft-seated, non-slip, tamper-resistant solid top deck.

To supply its customers' global factories, Airdex has integrated some of its production lines within local packaging suppliers. HP ships laptop products from Shanghai on locally produced Airdex pallets.

The bug issue
Foreign bugs transported in wooden packaging material are threatening many countries' native forests. To prevent this problem from spreading any further, conventional wood pallets need to comply with International Standards for Phytosanitary Measures (ISPM 15). This standard requires wood to be heat or chemically treated to kill bugs and larva prior to exporting/ importing. For conventional hardwood and softwood, treating is an extra process and adds time, material and cost to the end product. Pallets made from this type of wood must carry a stamp demonstrating that the treatment process has been completed.

HP still ships much of its products across international borders on wood pallets that are ISPM 15 certified or made of processed wood. (For additional insights on this issue, see "Transport Packaging," page 17.) The company only uses heat-treated wood pallets because methyl bromide, a chemical that is also used to sterilize wood, is an ozone depleter, Boeller explains.

Some pallet manufacturers are addressing the bug problem by manufacturing engineered wood pallets, like those from Litco International Inc. (Vienna, Ohio; www.litco. com). Under high heat and pressure, it molds pallets from resin and pre-and post-consumer wood waste. Plywood, orientedstrand board and MDF are other types of engineered wood that is used to make such pallets. Because the manufacturing process for such materials kills any bugs or larva that might be present, pallets made from engineered wood do not require ISPM 15-compliant treatment.

One advantage of pallets made from engineered wood, says Mark Halverson, coordinator of the industrial market segment for APA, the Engineered Wood Association (Tacoma, Wash., www.apawood.org), is that customs agents can easily see that the pallets are insect-free, which speeds inspection at foreign ports. Any product held up in customs for repalletizing will add to the shipping cost and may cause delivery delays.

Halverson says much of an engineered pallet's weight is in the blocks supporting the top and bottom layers. The APA is looking at using lighterweight material for the blocks, such as metal or extruded plastic, that would still maintain the pallet's compressive strength. One of its designs has hollow metal legs pressed into the pallet's top and bottom decks. It weighs 30-lbs. and can support 1,000 lbs.

Global irregularities
Wood pallets from Asia can be problematic because the quality of wood used for making pallets, as is the case in many areas of the world, is poor. What's more, because of a wide variety of transportation modes, there are many different pallet sizes. For example, because it is shipped in smaller aircraft, airfreight requires smaller pallets. Furthermore, many pallets used to ship product to Europe or North America may not work well in Asian distribution systems. But the biggest problem, HP's Boeller says, is communicatingto the manufacturing location what pallets should to be used.

Everything that is shipped to Australia-has its own pallet size, which is different from those in Europe and the United States. Australia was also the first country to strictly enforce ISPM 15 compliance. Product arriving on pallets that do not comply with the standard are held at customs and the goods must be repalletized. The non-compliant pallets are then burned on location.

Pallet configuration and use in some South American countries is similar to the United States. "Moving freight in Brazil is fundamentally like moving freight in the U.S. Trucks and pallets in the two countries are about the same size," Boeller observes.

Lightweight plastic pallets help HP reduce cost when it ships notebook computers from Asia to Europe.

The Engineered Wood Association has designed a lighter wood pallet that uses metal instead of plywood blocks.

Airdex plastic pallet-making machines, background, can be used anywhere in the world where EPS foam is available.


Outsourced Import Management

The Park West Collections division of Hanken Imports (Dayton, Ohio, www.hankenimports.com) imports silk flowers and silk birds. Park West's customers include small specialty and larger retail stores as well as resorts and commercial real estate groups. Hanken has 10 employees between both its core floral and the new furniture-accents businesses.

When the company began importing occasional furniture and decorative home accessories, it found that its 18,000-sq.-ft. warehouse did not have the capacity to hold the growing amount of furniture. In addition to shipping product from its warehouse, it was also importing full 40-ft. ocean containers, and hiring separate freight forwarders for direct customer delivery.

Ken Wolfe, president of the Park West division, has found that he can run his small distribution business more efficiently without having to move to a larger facility with help from UPS's supply chain logistics and freight services (Atlanta, www.ups.com).

Park West first sends customer orders to a supplier's factory in Indonesia. After enough orders have been produced, UPS sends a container to the factory where the product is loaded. UPS then coordinates the movement of Park West's sea containers through ports in Miami, Dallas and in California.

In addition to solving the storage shortage problem, Wolfe says UPS's Trade Direct services have allowed him to sell product in less-than-container load lots. UPS transports the containers from the ports and breaks down the bulk shipments to build skids wrapped for less-than-truckload movement to the final destination, direct to a store or to a customer distribution center.

Other benefits include reduced distribution handling and storage costs, faster customer delivery, faster payment and better cash flow. Because shipments are consolidated when they clear customs and there is less paperwork, the company has also reduced brokerage fees, billing reconciliation time and reduced the risk of error, loss or damage.

As a result of these changes to its supply chain, the furniture division has more than doubled in revenues but has kept staffing levels the same and hasn't had to expand warehouse space. Park West now surpasses the company's floral group as a percentage of the company's total revenues.

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