Chain of Thought

Decriminalize the Pallets in Your Supply Chain

When prosecutors look for ways to build a solid case against a criminal, drugs and guns found at a crime scene usually grab their attention. But there's another piece of evidence that often goes unnoticed at the outset of a case: pallets.

I'm talking about plastic pallets. As the value of plastics continues to rise, so does the theft of not only pallets, but reusable plastic containers, as well. Consider these numbers associated with theft of plastic assets:

• It costs businesses upwards of $500 million every year nationwide, according to the International Dairy Foods Association. Dairy companies alone lose nearly $80 million a year to plastic milk crate theft.

• Arizona businesses lose up to $3 million a year from the theft of pallets.

• In May 2011, Los Angeles authorities recovered more than 15,000 stolen plastic containers, worth nearly $1.3 million.

• In Maryland, four businesses combined lost nearly $6 million from plastic pallet theft in 2008.

• In San Bernardino County in 2010 one company claimed a $2.5 million loss from stolen plastic loading pallets.

• The U.S. Postal Service paid roughly $50 million last year to replace lost and stolen equipment, including plastic letter trays and tubs.

We've blogged about the USPS's efforts to recover their pallets via amnesty programs, but they've been only marginally successful. Part of that is because stolen plastic pallets and containers often end up at recycler sites where they are ground up into resin that commands a nice market price. Success depends on better cooperation among supply chain partners further up that chain.

According to Al Farrell, there's a large recycling complex of grinders in this country thanks to the growth of recycling programs. Farrell's vice president of asset management for iGPS, a plastic-pallet pooling company. Like any population, the recycling community is made up of good and bad citizens. It's the bad ones that cost iGPS and other asset owners lots of money. But it's not only money that makes this issue worth your attention as a good citizen. Farrell says pallets are often the tip of a crime iceberg.

“The crime of plastic grinding and theft is often accompanied by other crimes,” he told me. “It may be drug related, it may be commerce of other stolen goods.”

Why haven't we heard more about pallet busts?

“Prosecutors take on cases because they believe they're winnable,” he answers. “Law enforcement can understand large amounts of stereo equipment, but when talking plastic pallets, there's not the full recognition that this is a crime that should be prosecuted. Many jurisdictions are underfunded right now and this gets pushed down into the no-interest category.”

That is starting to change as asset owners and technology companies in industrial supply chains build a strong case for traceability.

“We need to get prosecutors to understand these are cases they can actually win,” Farrell says. “We do a lot of education that these are uniquely serialized assets and we can prove each has a unique identity and that we own it. We never sell it or part company with it, except to go into the supply chain under a rental agreement. RFID plays a key role in our being able to demonstrate this is our property.”

That message is gaining traction. The L.A. County Sheriff's Task Force has already busted a grinding group that on the lower floor was grinding plastic and other materials from stolen goods while on the upper floor was a grow-house for marijuana. Farrell says this task force has also busted up grinding operations that had meth labs connected to gangs and organized crime.

Fifty years ago, who in the material handling industry could have imagined that pallets would one day provide a solid base upon which law enforcement agencies could build a case against thugs and gangsters?

It's time to start imagining it happening inside your own supply chain. If you rent plastic pallets and containers, make sure they return to their owner. If you own them, protect them with serialization. If you find some strays with another owner's name on them, let that owner know. And if you learn that your supply chain has been using lost or stolen material handling assets for quite some time, report it to your local authorities. You may be instrumental in solving a bigger problem than you realize.

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