Paper Or Plastic?

With paper pallets now an option for retailers, which pallets are greenest?

Swedish home furnishings retailer IKEA is embarking on an ambitious initiative to replace all of the wooden pallets it uses with a single-use paper pallet that's lighter, thinner, less costly and “better than wood,” according to Jeanette Skjelmose, sustainability chief of the company's supply chain unit.

The conversion project began earlier this year in Germany and Japan before moving to Europe, and soon North America. By the end of its fiscal 2011, all IKEA suppliers are expected to have phased out wooden pallets. The new Tri-Hex corrugated cardboard pallets, developed by Loraine, Ohio-based Erdie Industries Inc., will be assembled on-site by most of IKEA's suppliers, and used only once before being recycled; they measure 2 inches high, weigh 5.5 pounds and can support almost 3,000 pounds.

“That's not enough,” says Lachlan R. McKinnon, VP, supply chain for Grand Rapids, Mich.-based Spartan Stores. “Some of our pallet loads are more than 5,000 pounds — especially when liquids are involved. The paper pallets wouldn't support them.”

Functioning as both a wholesaler and retailer, Spartan supplies approximately 375 independent grocers in Michigan, Indiana and Ohio, and operates 97 corporate-owned stores, including D&W Fresh Markets, Family Fare Supermarkets, Glen's Markets and VG's. And although it receives pallets from a variety of suppliers, it's had an exclusive and mutually rewarding pallet-pooling agreement with CHEP for the past 20 years.

While not right for Spartan, IKEA's paper pallet conversion process is expected to cut its transport bills by $193 million a year, since it won't have to transport the pallets “backwards in the supply chain.”

More important to IKEA is the sustainability benefits it believes are delivered by the paper pallets, the wood versions of which it says account for almost half of all of the pine and spruce used worldwide by the company, so the conversion will help reduce wood consumption.

Saving trees is also a key benefit touted by iGPS, in addition to other environmental benefits. “iGPS customers know that, in addition to saving money, they are making measurable contributions to sustainability each and every day by reducing unnecessary deforestation, preserving fossil fuels and reducing pollution,” says Lewis Taffer, CMO of the Orlando, Flabased supplier.

According to iGPS, its plastic pallets are 30 percent lighter than typical multiuse wood pallets — requiring less fuel for transport, and thereby reducing pollution and greenhouse gas emissions — and are 100 percent recyclable. If a pallet is broken, it will be molded into new ones, making its useful life indefinite. In addition, iGPS maintains that its plastic pallets won't clog landfills.

However, the fact that CHEP uses wood pallets doesn't mean it's harming the planet. For one thing, the pallets are maintained and reused, according to Michael Pooley, SVP sales and customer operations at Orlando-based CHEP USA. “Since they are reused, we minimize waste,” he says. “And because we're a pallet-pooling service, the continuous flow of pallets from suppliers to retailers to our maintenance depots and back again reduces the amount of backhaul transport needed to keep the system moving.”

The company is also moving its sourcing to sustainably managed forests, and plans to source exclusively from PFC-approved resources by 2015.

What's more, adds Spartan's McKinnon, CHEP's sheer size aids sustainability, as the company's many maintenance depots are often close at hand to many large grocers. “CHEP's depot is 10 miles away from us, so they don't have to consume fuel to come and pick up their pallets from us,” he says. “We just drop them off as our fleet makes their stops.”

While both CHEP and iGPS may have different means of achieving greenness, it's clear that both have attained a recognizable measure of success in this area. Indeed, both companies were named Top Green Supply Chain Partners on industry publication Inbound Logistics' G75 list this past June, an honor that recognizes these companies based on their measurable, documented investment in green technologies, processes and systems.

It thus seems clear that when it comes to pallets, we once again find ourselves asking: “Paper or plastic?”