How the Core Crisis Presents New Opportunities for Pallet Manufacturers

Chaille Brindley’s recent article in Pallet Enterprise suggests the core shortage witnessed over the last two years is becoming the new norm, prompting recyclers to find new ways to meet customer demand.  Although one might think the core crisis is strictly the domain of recyclers and their customers, the scarcity of cores is having a ripple effect on the entire pallet manufacturing landscape.

The collapse of the U.S. economy in the fall of 2008 actually led to a short term abundance of cores that continued well into 2010.

  2010 was significant for the pallet industry because as the available pool of cores began drying up, Costco announced their Block Pallet initiative.  Moving forward, Costco would no longer accept shipments on traditional 48” x 40” stringer pallets.  Although some Costco suppliers opted for new white wood block pallets, the majority turned to the rental market.  With one of the major drivers in the 48” x 40” market gone, a significant source of cores all but dried up.

Coming to terms with the core crisis required adaptation.  According to Brindley, with leaner inventories, most recyclers were forced to master the art of “supplying customers hand-to-mouth.”  Although Brindley and other industry experts suggest recyclers have grown accustomed to running their businesses on smaller inventories, they also believe the core shortage will continue as long as demand for new 48” x 40” stringers remains light.

On a positive note, Modern Materials Handling’s 2012 Pallet Review found most pallet users are not experiencing significant difficulties obtaining used pallets.  With this said, Brindley cautions the relative ease of used pallet acquisition may stem in part from an economy that is slow to wake from the doldrums, noting that the used market may look quite different with continued economic recovery.  A prolonged period of 3-5% growth may require a massive infusion of new pallets in order to keep pace with demand.

Pallet companies will need to develop long term strategies to counter a dwindling supply of cores. Improved collection efforts and discovering new sources of cores, combined with a tempering of customer expectations and higher pricing represent good starts.  There is also guarded optimism that the new 9BLOC initiative may gain some much needed traction, resulting in a significant infusion of new white wood into the pallet pool.

A continued core shortage could also prompt logistics professionals to turn to recycled pallet alternatives in an effort to hold the line on costs.  Instead of using cores, Litco presswood pallets are molded from damaged logs, wood waste, and other wood by-products, making them a cost effective general use solution when core shortages drive the price of recycled pallets up and the quality down. Presswood pallets can also be a viable alternative to rental pallets for some customers. If concerns over price and quality of recycled pallets or rentals are prompting a search for alternatives, presswood pallets from Litco may be the answer. To learn more about the advantages of using presswood pallets as your domestic and export pallet solution, contact Litco today!

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How the Core Crisis Presents New Opportunities for Pallet Manufacturers