The most undervalued part of the global economy

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on Friday, 05 April 2013 in Society & Culture

 

 

 

 

 

 

 

 

 

We see them at the back of factories, burn them at bonfires and pick giant tins of cooking oil from discount supermarkets. What are they? Humble collections of wooden slats nailed together, otherwise known as Pallets.

There are billions of them. An estimated 80% of the world’s trade are carried on them. And about 50% of the planet’s hardwood production goes on making them. 

But they are not just boring piece of wood made to carry things around, either. They have had a profound influence on the way we design and manufacture products.

For example, companies like IKEA, have literally designed thousands of products around pallets. The oddly named Bang mug has had three redesigns, each one not for aesthetic reasons, but to make sure that more mugs would fit on one pallet. After making changes it became possible to stack over 2,200 mugs on a pallet instead of the original 864, thus reducing shipping costs by 60%.

Indeed a new science has emerged, known as pallet optimisation; a kind of tetris-like game for packaging. Some really cheeky manufacturers design cartons that actually overhang by a couple of inches. This is frowned upon by shipping companies because it produces pallet gaps and ruins their packing efficiency ratios.

The reason why pallets have become ubiquitous is because they have changed the speed at which our shipping economy moves. In the 1940’s it took three days to unload a ship carrying 15,000 cases of goods. With pallets the same load now takes 4 hours. 

So who invented the pallet? No one knows for sure. Wooden skids were used by the paper and automotive industries before the 1920s to move heavy items around factory floors. However without efficient means to lift them they were cumbersome and difficult to push around. 

The invention of the forklift truck in the 1930s doesn’t seem to have made much difference. During the Great Depression, with ample labour and little cash, there was little urgency to invest in new material handling methods.

However the Second World War changed everything. Having to move vast amounts of goods and equipment the US army was quick to see the benefits of combing pallets with the use of forklift trucks. The war in the Pacific saw a desperate need for volume movements and where the use of pallets would have the greatest impact. The humble pallet was born.

After the war, the United States military left about 60,000 of them in Australia, starting an industry in which Australia now leads the world. It specialises in ‘pooled’ pallets. Pooled pallets are simply rented pallets – they go out, deliver things, and then return to the company. Anywhere in the world you see a blue pallet its one of about 280 million that belongs to the Australian company CHET. A red pallet belongs to its main competitor PECO. The alternate, one-way pallets are the ones you often see scrapped. They, like their name implies, only go one way.

The pallet is one of those things that, once you start to look for it, you see everywhere; stacked outside supermarkets, supporting pyramids of Coke in store, being broken up for a beach bonfire or even recycled into innovative modern furniture. For the most part, though, they are totally ignored. Yet without pallets, most of what we eat, wear or use would not have got to us as easily or cheaply as it does. A wonder of the modern global economy; hugely understated, yet without which we could not live our everyday lives.

 
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