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When It Comes to Pallets, Is Bigger Better?

By Rick LeBlanc

Editor, Reusable Packaging News

For some products, going big is a no-brainer. If you are shipping long pipes, panels, or oversized machinery. for example, a large pallet is required to support and protect your valuable products.

For a great many pallet buyers and supply chain professionals, however, the footprint (length and width dimensions) of the pallet ordered isn’t even a consideration. For many supply chains, it is already set in stone. The chances are, that the footprint has been long established and investment has been made in facilities and equipment throughout the supply chain to support that size or a limited range of sizes. As such, it may be beneficial to modify some aspects of your pallet, but usually, the length and width are non-negotiables.

In the consumer products industries, for example, the 48×40-inch pallet is the most common size. That is the size you will see if you walk through a Walmart or Costco store, or many of the display pallets you will see at your supermarket. Most CHEP (blue) and PECO (red) rental pallets as well as whitewood GMA-style pallets fall into this category.

From product manufacturers to distribution centers to retail outlets, considerable investments have likely been made to work seamlessly with that footprint, including equipment such as palletizers, conveyors, and storage systems ranging from conventional pallet racking to AS/RS systems. At the same time, those packaged consumer goods have been designed to fit perfectly on a 48×40 to optimize shipping and minimize product damage.

However, we should not just blindly accept pallet size as an inevitability because we see examples worldwide where supply chain leaders have successfully changed or at least added pallet sizes in the name of competitive advantage. So from a strategic perspective, it makes sense to understand a bit more about pallet sizes, and why they matter. In this installment, we will look at the basic case for going bigger. In a future article, we will look at the advantages of going smaller.

Go Big or Go Home?

It seems intuitively like bigger should be better. A larger pallet can hold more product, making each pallet handling proportionately more efficient. In the 1960s, many grocery retailers went with a 40×32-inch pallet footprint, while the grocery manufacturers were pushing for a 48×40. The manufacturers of the day were more powerful than the retail trade, which was more fragmented in those days. It turned out that the retail losers in that tug of war were really the winners! The conversion resulted in a massive 50% gain in product that could be handled by each forklift move. Talk about a gain in efficiency!

There are similar opportunities elsewhere. Consider that the standard UK footprint is 1200×1000-mm (our 48×40 equates to 1219 x1016) while the mainland Europe standard is 1200×800 If the Europeans switched to the larger 1200×1000 size, which is 25% larger, they would enjoy an automatic efficiency boost of 25% for every pallet handled. It should make sense to switch, right?

But remember all that equipment we listed earlier that is already in place to handle the smaller size? And consider that warehouse automation technology is significantly more mature in Europe than in North America. There are considerable barriers to switching, even if the outcome might be more advantageous over the long haul.

That’s exactly what one study found out in Australia back in 2001. The Australian standard is 1165×1165 but two-thirds of Australian trade was taking place with countries that used the 1200×1000 footprint. Imports were not compatible with Australian logistics equipment and had to be rehandled. To eliminate such inefficiencies, the Australian Department of Transport commissioned research to explore the advantages of switching to the more common 1200x1000mm footprint.

The study determined that switching would generate a positive net present value of 2.5 billion USD. However, in the near term, Australian supply chain operators would face approximately 600 million USD in switching costs over the first decade of such a conversion initiative. The project never went forward.

Not surprisingly, in more recently developing supply chain markets such as China and India, which are not impeded by legacy infrastructure investments, the 1200×1000-mm has emerged as the footprint of choice – a larger size that is more in sync with the pallet size of international trading partners.

Bottom line, a larger pallet can enable material handling efficiency by boosting the amount of goods that can be handled or stored on each pallet, but as we have seen, however, history matters. The short-term financial pain of converting from legacy material handling systems can trump longer-term efficiency gains. That’s where having a longer term vision can help.

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