estudo de pallets

Pallet waste and reusable pallets

at Aggregate Industries

Project code: WAS901-300 ISBN: [Add reference]

Research date: September 2010 - March 2011 Date: May 2011

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Written by: Greger Lundesjo, The Logistics Business

Front cover photography: Pallet waste at Aggregate Industries facility at Hulland Ward

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Pallet waste and reusable pallets at Aggregate Industries 1

Executive summary

Aggregate Industries (AI) distributes its hard landscaping products on timber pallets. This has always been a one-

way flow of pallets; some are recycled after use but many go to waste. Pallets are tailored around specific

products hence the range of pallets is very large. In 2010 AI has instigated a trial scheme for the repatriation of

pallets to evaluate if reuse is feasible. Following that trial AI is in 2011 rolling out the use of reusable pallets to its

largest nationwide customer B&Q.

Four new pallets are replacing eight old pallets and they are designed with repatriation in mind. These are

relatively low cost pallets making it challenging to make a financial case for repatriation. If however about 50% of

pallets can be reused at least once a cost breakeven compared to one way pallets is reached. At this level of

reuse considerable reductions in waste can be achieved:

Wood waste reduction – 996 tonnes per annum

Reduction in embodied carbon – 199 tonnes per annum

If this level of reuse were to be applied across the entire product range waste savings of up to 3000 tonnes

would be within reach.

These environmental benefits can be achieved on a cost neutral basis. This is for a limited part of the product

range to one customer, albeit a large one. There is scope therefore for wider use once the principle of reuse

gains acceptance with a larger customer base.

AI is an active member of the Construction Products Association (CPA) and there is an action programme within

the CPA aimed at spreading the concept of pallet repatriation. AI’s introduction of reusable pallets is hopefully at

the forefront of what will become an industry-wide trend.

Figure 1 The best-selling Bradstone range – decorative hard landscaping

products on the new reusable pallet


Contents

1.0 Background ................................................................................................................................. 3 2.0 The pallet flows........................................................................................................................... 4 3.0 The 2010 trial .............................................................................................................................. 5

3.1 Scope of trial ...................................................................................................................... 5 3.2 Evaluation .......................................................................................................................... 6

4.0 The 2011 development ............................................................................................................... 6 4.1 The new pallets .................................................................................................................. 7

4.1.1 Pallet dimensions .................................................................................................... 7 4.1.2 End supports .......................................................................................................... 7 4.1.3 Cost ....................................................................................................................... 8

4.2 Consequences of the new design .......................................................................................... 8 4.2.1 Production – palletising ........................................................................................... 9 4.2.2 Transport ............................................................................................................... 9

4.3 Quality ............................................................................................................................... 9 5.0 Pallet repatriation and waste reduction .................................................................................... 9 6.0 Cooperation within Construction Products Association (CPA) ................................................ 10 Appendix A, Action list CPA .................................................................................................................. 11


1.0 Background Aggregate Industries (AI) is one of the UK’s leading suppliers of building materials to the construction industry.

Hard landscaping products such as paving and decorative stone are supplied from the Hulland Ward facility near

Ashbourne, Derbyshire. This is an 85-acre site of which 60 acres are used for storing product. The business is

fairly seasonal with stocks being built up during the autumn and winter months and deliveries increasing from

March/April and on through summer to early autumn.

Figure 2 The bestselling Bradstone range - the bedstead

pallet design holds the product safely when the shrink

wrap has been removed

Important channels to the market for AI are the builders’ merchants (Travis Perkins, Jewson’s, Buildbase, etc.)

who sell the product on to the construction trade and the large DIY sheds such as B&Q. For large construction

projects AI typically delivers directly to site. When delivering to builders’ merchants and retailers it is important

to make the product safe and easy to handle (for H&S and efficiency reasons) and to present the product in an

attractive manner. Pallet handling is therefore used. There is typically a one-way pallet flow from Hulland Ward

and AI has no control over what happens to the pallet when it reaches its final destination - whether at a builders’

merchant’s yard or on an end user’s site. Many pallets are simply thrown in mixed skips; some are de-nailed and

sent for wood recycling while very few are reused. AI is therefore aware that a substantial amount of pallet waste

is created; but it is being created in many locations throughout the country in fairly small volumes at each

location.

This was the situation in 2010 when AI contacted WRAP and started the process of analysing the pallet waste

problem and exploring whether pallets could be reused.

There is a wide product range, ca 1600 Stock Keeping Units (SKUs), and as the products vary in size and the

pallets are required to “hold” the heavy product in a stable manner, pallets are designed around the product. The

numbers proliferated until there were more than 80 pallet types although AI has now begun to reduce this

number. These are timber pallets and many have bedsteads to stabilise the product (see photograph above).


The product turnover at any individual builders’ merchant can be fairly low, and the product (and pallet) is

normally stored outside in a yard – as at AI’s factory at Hulland Ward. The pallets are therefore exposed to

weather and subject to handling and stacking over a considerable period of time, and when emptied they are not

always in a good condition. Not all builders’ yards have a good asphalt surface; and when conditions are

particularly poor, pallets deteriorate faster - so that there is less opportunity for successful return and reuse.

AI is a signatory of the Halving Waste to Landfill commitment and has a corporate target of 20% reduction in

packaging waste (including pallets) between 2008-2012. At the point of writing this target has already been

achieved; for instance return pallets have been introduced for bagged products leading to a 35% waste

reduction. Repatriation of pallets is seen as one important part of AI’s waste reduction strategy.

2.0 The pallet flows

The diagram illustrates the main material flows out of Hulland Ward. These are mainly one-way flows that

disperse pallets from one central point to a large number of retail and user locations throughout the country.

Figure 3 Diagram showing pallet flows across the

Aggregate Industry supply chain

Diagram legend

A: Builders’ merchants who collect the product with their own transport from Hulland Ward or another AI

distribution centre.

B: Builders’ merchants who rely on deliveries from AI to their sites.

C: DIY retail outlets such as B&Q, Focus and Homebase.

1 Collection by builders’ merchants at Hulland Ward. These are mainly merchants fairly local to the

Derbyshire location - presenting the best opportunity for the cost efficient return of pallets to AI.

2 Deliveries from Hulland Ward to builders’ merchants. These are often a milk round i.e. with many drop

offs.


3 Deliveries from Hulland Ward to AI’s two regional factories and distribution centres, one near Cirencester

and one near Glasgow. There should be a good opportunity to carry return loads if empty pallets are

collected at the distribution centres.

4 As in route 1, where local merchants collect with their own transport, this offers good opportunities for

the return of pallets.

5 Same as route 2, milk round from AI’s site with limited return logistics opportunities.

6 Deliveries from Hulland Ward to retailers’ distribution centres. B&Q has a facility for de-nailing and

recycling the timber. B&Q has a minimum drop quantity of 5 tonnes which means that even to this

major customer deliveries are part of a milk round.

7 Deliveries from retailers’ distribution centres to retail outlets. Return logistics is in operation here with

empty pallets being returned for recycling.

8 From the builders’ merchants, some products are being taken off pallets leading to empty pallets at the

merchants’ yards. In other cases the merchant delivers, on pallets, to customers. Neither AI nor the

builders’ merchant has any control over what happens to the empty pallet on the customer site. There is

no organised return logistics solution in place for this last leg of the pallet’s journey.

3.0 The 2010 trial

In the autumn of 2009 AI set in motion a trial to investigate whether a pallet return and reuse operation could be

introduced.

3.1 Scope of trial For the purpose of the trial two pallet sizes of a simple pallet type were selected.

Figure 4 Some of the trial pallets at a builders’ merchant’s site

This is one of the most commonly used and cheapest pallet types. Approximately 240,000 per year are bought by

AI and sent out into the distribution chain.

For the purposes of the trial AI purchased 1000 pallets - 500 of each size. A small modification was made to the

design of the pallets in order to strengthen them, and AI hopes it will be possible to get three return trips out of

each pallet before it is recycled by chipping or burning for energy.

The pallets purchased for the test were paint-marked and individually numbered so that they could be traced.


3.2 Evaluation

The main conclusions from the trial were:

Pallet quality. There is no technical obstacle to reusing pallets with regard to pallet quality. The

returned pallets were generally in very good condition, although it should be noted the trial did not use

bedstead pallets.

Quantities returned. AI identified a potential to return about 40% of pallets in this particular product

range and through this sales channel. The trial however involved only a fairly small number of local

suppliers.

Costs. This is one of the cheapest pallets in the range which makes it very difficult to make a

commercial case for reuse. The cost of return transport, quality check and repair would in many cases

be as high as the cost of a new pallet.

Based on these observations AI decided to focus on large nationwide clients using more expensive bedstead

pallets and where return of pallets can be organised via the clients’ Distribution Centre (DC) network.

Figure 5 Trial pallets returned to Hulland Ward after their first round trip,

still in good condition and ready for reuse

4.0 The 2011 development

Ai formed a Sales Pallet Action Group to drive the return pallet issue forward. It was clear to AI that changes of

this kind had to involve most parts of the organisation. The group therefore included the marketing department,

customer account manager, technical manager, quality manager and the senior environmental advisor. Apart

from this core team the development has also involved production and health and safety experts.

After the initial pilot AI decided next to focus on the pallet flow to the largest customer - B&Q. There were several

compelling reasons for this choice:

Large volume makes it possible to achieve substantial waste savings.

B&Q operates DCs and already returns pallets (blue CHEP pallets) to the DCs from the stores. If B&Q

agrees to return AI’s pallets to the DCs then vehicle loads can be collected – preferably backhaul after

deliveries - and the return logistics problem can be solved economically.

The pallets are larger and typically use bedsteads and are therefore in a price range where reuse is

more financially viable.

There was already a need to redesign the B&Q pallets to fit the standard racking in the DCs without

having to first place the AI pallet on a CHEP pallet as has been done previously.


The bedstead design used on the old pallet presented a major problem regarding repatriation. Empty bedstead

pallets cannot be stacked in a space-efficient way and the pallets invariably get broken up if the bedstead is

removed. An alternative design for holding and displaying the product was required for pallet repatriation to be

successful.

The new pallets will be used for B&Q product as from 1 April 2011.

4.1 The new pallets Four new designs have been introduced, replacing eight old pallets. These four designs will cover 60-70% of the

volume sold to B&Q.

4.1.1 Pallet dimensions Two designs measure 900mm X 750mm and two are 900mm X 1200mm. In all cases the pallets are designed to

be stacked in standard pallet racking with the 900mm dimension into the rack. Opening for the lift truck’s fork

entry is on the 750mm and 1200mm side respectively.

The differences in design between the pallets of the same dimension are in the arrangement of the decks and

stringers. The top deck is designed to support the specific product types using a minimum amount of material.

Bottom deck and stringers are then fitted to make a pallet of requisite strength.

The pallets are designed to minimise the use of materials. The new pallets made for repatriation do however, for

strength, use a slightly thicker material than the old designs.

4.1.2 End supports

Instead of the elaborate bedsteads two simple one-piece attachments are fixed at each end of the pallet to

stabilise the load. In the test pallets produced so far these have simply been nailed on and would be removed

and discarded when returning the pallet. AI is however considering fixing each attachment with a single screw;

this can be loosened and the attachment folded down into a horizontal position when the pallet has been emptied

and is ready for repatriation. This way the attachments are not lost and can again be repositioned when the

pallet is reused.

Figure 6 The new pallet with the simplified support replacing the

bedstead. To be replaced by a foldable design


4.1.3 Cost

These are low-cost pallets, below £5.00 each (the exact price paid by AI is commercially sensitive). While still

below £5.00 the new design is 45% more expensive. Given that more than 150,000 pallets per year of this type

are used this represents a significant on-cost. Reuse therefore is economically as well as environmentally

important.

To assess the overall economy of reusing pallets the reused pallet is given a cost based on the repatriation cost.

The repatriation cost includes the return transport (assuming separate transport and not backhaul, i.e. a

conservative estimate) and a quality inspection of each pallet and repair where appropriate. Feedback after the

first few months operation will allow AI to establish this cost; this analysis is based on an estimate.

Without giving away the exact costs the relative cost ratios are as per the table below with the new pallet set as

100.

Pallet type Relative cost

New reusable pallet 100

Old non-reusable pallet 69

Reused pallet 43

4.2 Consequences of the new design

Because the pallets have to conform to the common depth (into the racking) of 900mm they are no longer fully

tailored to the load. This means that in some cases the product doesn’t fully fill the pallet depth. For stability the

product is stacked centrally which means that the pallet is wider than the product. This has consequences in

production and transport. With some products there is a gap of 150mm from the load to the edge of the pallet.

Figure 7 This picture shows how the standard pallet size makes the pallet

wider than the product


4.2.1 Production – palletising

The last stage of the production process is the palletising of the product. About 60% of the volume is palletised

automatically while the rest is handled manually. With the pallet being wider than the stacking pattern for the

product, this means that for some products the operators have to reach further to place the load. This can have

an impact on productivity and may carry an increased health & safety risk. It may be that mechanised solutions

should be used throughout for this heavy task.

4.2.2 Transport

With the pallet being wider than the load there will be gaps between loads when stacked on a trailer for

transport. This may lead to fewer products on a trailer than was previously possible, though the exact impact has

not yet been assessed. (The old pallets being of non-standard size and not designed to fit precisely on a trailer

they would also sometimes leave gaps and not fill the trailer fully).

4.3 Quality

B&Q requires a “Pallet Exception Authorisation” form to be submitted for any pallet that is not the standard blue

100x1200mm pallet. This includes detailed specification and confirmation of load tests and load ratings. This has

been done for the new pallets.

The quality inspection routine will have to ensure that pallets being reused still comply to that standard.

5.0 Pallet repatriation and waste reduction

There is no pallet buy back or deposit scheme in operation. The repatriation of pallets depends on B&Q returning

pallets from their stores to the DCs and there to sort the AI pallets from other types. The AI pallets will have a

clear colour coding to facilitate sorting. AI will collect at the DC either in a dedicated collection journey or,

preferably, as backhaul after delivery.

A financial breakeven point has been calculated. This is where the proportion of pallets being reused is such that

the cost of using the new more expensive but reusable pallet is the same as using the old cheaper pallet. The

number of reused pallets obviously equates to a reduction in wood waste which has been estimated as has the

embodied carbon related to that wood consumption.

The table below shows the waste reduction if the commercial breakeven point is reached.

Pallet type Proportion pallets

used

Wood waste per annum

(tonnes)

Embodied Carbon

(tonnes)*

New reusable pallet All new 1,800 360

New reusable pallet 45% break even 804 161

Reused pallet 55% break even - -

Savings potential per

annum

996 199

*The embodied carbon is based on the Inventory of Carbon & Energy (ICE) issued by the University of Bath. The

category used is sawn softwood from sustainable managed forests.

Sales of decorative landscaping products is highly seasonal with the first peak of the year at Easter and the spring

bank holidays. As the pallets are being distributed from 1 April the first returns can be expected towards the end

of May. The first year will see a build up of the new pallet volumes and the reuse level will probably not reach its

full potential until the 2012 season. The winter sees a large build up of stock in readiness for the new season; the

2011/2012 winter period can make full use of returned pallets and the above breakeven level is a useful target

for 2012.


It should be noted that this analysis looks narrowly at savings achieved by AI. The new pallets will however also

save B&Q having to place AI’s pallets on a standard blue pallet, reducing the pallet usage at B&Q.

6.0 Cooperation within Construction Products Association (CPA)

AI has been actively cooperating with the CPA throughout this process. There is a Pallets Action Group within CPA

which has drawn up a Pallet Repatriation Priority Actions List. The 19-point action plan sets out priority

actions that all member organisations should strive to deliver during 2010/11 and beyond. The action plan seeks

to involve manufacturers, contractors, merchants and retailers.

The action plan can be found in appendix A.


Appendix A, Action list CPA

Pallet Repatriation Priority Actions List The following actions were voted for by members of the Pallets Action Group and represent the priority actions that all member organisations should strive to deliver during 2010/11 and beyond. Progress against these actions will be captured at the Pallets Action Group meetings; with a short annual progress report produced detailing the progress made.

In priority order: 1. Manufacturers to include clear company branding (identification) of white pallets to aid

identification on site (PR11)

2. Manufacturers/Pallet specifiers to look at the full business case (including environmental,

economic and social factors) for increasing the specification of their branded pallets with a

view to greater repatriation and reuse (PR23)

3. Larger number of UKCG members (Contractors) to engage with the Pallets Action Group and

support implementation of Pallets Repatriation Action Plan going forward (PR8)

4. Manufacturers to establish and communicate company processes to increase back to back

recovery of pallets from sites which reduces transport costs and emissions (PR9)

5. Merchants to improve education and awareness of employees at a branch level especially

amongst branch managers and delivery drivers of company policies on pallet repatriation

(PR16)

6. Research consultancy to prepare proposal to undertake life cycle cost analysis of different

pallet pools. Should include direct capital and set up costs as well indirect costs, such as

charges and labour costs. Should include a particular emphasis on establishing the per trip

cost of one-way white wood pallets vs multi-trip pallets (PR22)

7. Contractors to deliver targeted training for onsite workers to increase awareness of the need

to repatriate pallets. This can include poster campaigns, better signage, tool box talks, and

site inductions for sub-contractors. Should especially target site foremen and managers (PR2)

8. Contractors to have dialogue with waste management contractors to better understand

recovery processes for wood waste in skips, and existing end markets. Establish processes to

recover quality pallets from skips for reuse within the supply chain (PR7)

9. Manufacturers to clearly communicate and promote their pallet repatriation processes to

contractors, merchants and other end customers (PR10)


10. Dialogue between manufacturers, merchants, contractors and other end users to better

understand what other incentive schemes could be offered to increase retrieval rates. This

should include a supply chain evaluation of the current deposit/rebate pallet systems in

operation to understand if they do actually incentivise repatriation (PR30)

11. Manufacturers to print information on pallets to aid retrieval. To include the standard

phrase ‘This pallet is returnable’ (PR12)

12. Manufacturers to set up partnerships with third party pallet recovery companies to assist

with pallet repatriation (PR13)

13. Merchants to establish clear internal processes for the collection of pallets from sites to

merchant branches. Should include implementation of back to back recovery of pallets

(PR15)

14. Merchants to communicate and promote merchant pallet repatriation schemes to all

contractors and other end customers with email and postal shots, and improved

communications between branch managers and sites (PR17)

15. Merchants to initiate repatriation trials (perhaps in partnership with pallet recovery

companies) to collect all pallet types from sites for sorting, repair, and reuse (PR18)

16. Pallets Action Group to establish Construction Products Supply Chain Pallet Repatriation

Accord which seeks commitment from across the supply chain to target and reduce use of

one-way white wood pallets and to promote multi-trip specifications (PR19)

17. Pallets Action Group to carry out a feasibility study to examine the economics, practicalities

and benefits of establishing a construction wide pallet pool for the 1200 x 1000 pallet that

will serve the construction industry. Would include possibility of a minimum industry pallet

specification (PR21)

18. Manufacturers to put in place robust processes and policies that clearly target repatriation

of deposit/rebate style pallets (PR25)

19. Pallets Action Group to initiate dialogue to explore an industry standard marking/logo that

indicates to all that this pallet is designed for the construction industry and is returnable to

the supplier under the ‘Accord’. Perhaps only accord signatories would be authorised to use

the logo on their pallets (PR38)

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