News

Oct 15, 2024

Eco-tip: Pallet glut could signal slowing economy

Commerce moves on pallets. Those plastic or wood platforms, with side notches for lifting by forklifts, are essential for storing inventory, moving bulky items and shipping products. Following a spike

Commerce moves on pallets.

Those plastic or wood platforms, with side notches for lifting by forklifts, are essential for storing inventory, moving bulky items and shipping products.

Following a spike in demand for pallets to accommodate the frenetic pace of shipping consumer goods during the pandemic, businesses have been steadily “working off inventory,” so pallet recyclers were looking for a rebound in 2024, according to Glen Meeks, executive vice president of the Western Pallet Association.

Instead, pallet inventories continue to climb.

“Pallets are a bellwether of the economy,” said Meeks. "When the economy slows, the supply of pallets can increase, causing pallet prices to fall; a good economy means more demand for pallets, and prices will increase.”

Beatrice Vasquez, owner of Oxnard Pallet Co., notes an especially painful surplus of plastic pallets. These platforms last longer and usually cost more than wooden pallets, but recyclers have fewer options when customers aren't buying.

“We can send the wooden ones to a grinder to be turned into mulch and there have been times when we have been able to sell the plastic ones for recycling," Vasquez said. "But plastic prices are down, so we just can’t pick up large amounts of those for awhile."

Vasquez is working on a deal with a large company in Oxnard that might change shipping practices to start reusing plastic pallets generated by a large Thousand Oaks company needing to regularly discard them. But pallet companies are increasingly scrambling to put together deals like these.

Another option for plastic pallets could come from Berg Mill, a recycling and brokering company marketing many of the recyclables from generators and sorting centers in Ventura County. Daniel Marks, Berg Mill’s chief executive officer, has previously worked with Oxnard Pallet Co. and may be able to improve on previous offers. For the past few years, the cost of baling, loading and shipping exceeded the value of this type of plastic. However, recently, a buyer in Malaysia offered to pay for 25,000-pound loads stacked tightly in shipping containers.

Pallet recyclers still pay up to $2 per pallet to collect standard wood pallets, measuring 48 inches by 40 inches, but most have started charging to collect less desirable or broken pallets. Alco Pallets in Oxnard continues to pay for many sizes but discontinued collection services, accepting only dropped-off pallets and excluding plastic ones.

In 2020, the global pallet market was valued at $78 billion and was projected to exceed $110 billion by 2027, according to Robert Khachatryan, chief executive officer of Freight Right Global Logistics. He noted hard economic times for the industry could cause some pallet companies to go out of business, and when economics improve, pallet business expansion could take years to catch up. In the meantime, lack of convenient options may cause some to dispose what they cannot easily recycle.

The solution Vasquez hopes for is increased market demand for used pallets. If that demand does not come from an improving economy, it must come from changes in business practices.

With pallets currently selling for low prices, businesses regularly buying new should consider buying used instead. Fear of broken parts or rusty nails is largely unfounded if buying from a reliable recycler, according to Vasquez. Her company does not just move pallets for reuse, she said, but instead pulls faulty stringers off old deck boards and remanufactures the pallets.

Even during times of surplus supply, contracting for separate collection of pallets is an important way to save natural resources and reduce landfilled waste. When collection for reuse is impossible, recycling wooden pallets is an alternative. However, pallets placed in 3-cubic-yard garbage bins — the type lifted over the front of a truck — will likely not be pulled out of the garbage at sorting centers.

Instead, recycling requires placement in designated containers. These may be bins or roll-off boxes identified for collection of construction debris or for wood and yard clippings.

Eco-Tip is written by David Goldstein, an environmental resource analyst for the Ventura County Public Works Agency. He can be reached at 658-4312 or [email protected].