Aminur Rahman Kasem

MSc in Consumer Science

TU Munich

Declaration of Authorship

I hereby declare that the thesis submitted is my own unaided work.

All direct or indirect sources used are acknowledged as references.

I am aware that the thesis in digital form can be examined for the
use of unauthorized aid and in order to determine whether the thesis
as a whole or parts incorporated in it may be deemed as plagiarism.
For the comparison of my work with existing sources I agree that it
shall be entered in a database where it shall also remain after
examination, to enable comparison with future theses submitted.
Further rights of reproduction and usage, however, are not granted
here.

This paper was not previously presented to another examination

board and has not been published.
 Contribution of Wooden Pallets for the Logistics Industry
under Economic, Technical and Ecological Considerations

Nowadays, the packaging is a source of improving the efficiency for

distribution of goods. For handling, transporting, and distributing
products to retailers, a pallet is the most used packaging type. A
pallet is, a mobile and stiff unit load platform, used for congregating,
storing, piling, handling, and transporting materials in an efficient,
reliable, and indefectible way (Buehlmann et al., 2009). Several
kinds of materials such as wood, metal, and plastic are used to
produce pallets (Clarke, 2004). Among these various types of
pallets, the wooden pallet has been in a dominant position in the
world of the logistic industry (Buehlmann et al., 2009). As the most
common pallet in the world, wooden pallets are strong, reliable,
inexpensive, and safe. They are used to distribute or transport
materials or goods, especially for shipping of heavy and fragile
products (e.g. machinery equipment, glass), from producer to
retailers. Companies also can minimize their distribution cost
through wooden pallets. The production process of wooden pallets
is economic and environmental friendly as they are manufactured
from the scrap that is residue after the construction of house and
furniture (IFCO, 2009). Wooden pallet is also recyclable, reusable,
and repairable. These characteristics make wooden pallets more
popular to logistics service providers. However, there are some
counterblasts that wooden pallets have a great environmental impact
that a huge number of trees are cut down to produce and fulfill the
ever-increasing demand for wooden pallets. They are also
responsible for the generation of carbon gas and solid waste. The
main aim of this essay is to identify the major contribution of
wooden pallets in the logistic industry. Other specific objectives are-
(1) to find out the economic contribution of wooden pallets, (2) to
assess the technical function of wooden pallets, and (3) to
investigate the impact of wooden pallets on the environment.

Wooden pallets play a significant economic role in the logistics

industry from producing cost-effective and efficient distribution or
transportation for goods to creating a huge employment opportunity.
Wooden pallets are much cheaper than other pallets (Twede et al,
2007) and it helps the companies to minimize their cost in every step
of the supply chain. The reason behind the cheaper rate of wooden
pallets is the result of a low manufacturing cost. Generally, most of
the materials for producing wooden pallets are available and easy to
collect at a very low price as they are the by-product of timber used
in making building and furniture (IFCO, 2009). In addition, wooden
pallet industry is creating a market for sawmills’ lower quality
hardwood, which might be remained unsold otherwise (Buehlmann
et al, 2009). Hence, companies gain low price products and sawmills
also benefit from this exchange. Wooden pallets industry is also
generated an enormous employment opportunity for the rural
economy. In Europe, there are 3000 wooden pallets manufacturing
companies who employ 50000 people (European Confederation of
Woodworking Industries-2011). Without wooden pallets, it might
be very challenging and expensive to ship goods. Then many
products would have lifted manually, which eventually will increase
the handling cost or the need to use more expensive machinery. As
a result, economic transportation cost could be high. So, it cannot be
denied the economic contribution of wooden pallet to the logistic
industry.

Wooden pallet moves the world as it is one of the most used pallets
to transport materials from one place to another. It is the necessary
part of the supply chain of majority of companies to use wooden
pallets for both internal product handling and external distribution
(Elia and Gnoni, 2015). For instance, many companies depend on
wooden pallets to transport their products such as ceramic, grocery,
home appliances, medicine company etc. to retailers or customers.
Basically, pallets made from wood are used to ship several goods
within a pallet. Because it is better to transport a pallet full of heavy
materials (e. g. bathtubs, spare parts of machinery or refrigerator)
than moving single tubs or bulky goods. Technical functions of
wooden pallets can be classified into three main activities: contain,
handling, and protect. First, a pallet has to hold all the goods together
that it encloses in the distribution. Second, pallets facilitate the
distribution in the logistics industry. The purpose of pallets is to
increase the productivity of material handling system and efficiency
and effectiveness of the logistic system. They also reduce the
loading and unloading time. Third, ensuring the protection of
materials is the principal task of pallets and they are used to reduce
the damage rate of products. They also ensure that the goods reach
to the customer in the exact shape and quality. Wooden pallets
perform these basic functions with much more efficiently than other
pallets as it is suggested by Bilbao (2011) that wooden pallets are
safe, reliable, and efficient for transporting the materials.

To understand the ecological or environmental contribution of

wooden pallets, the manufacturing process must be considered first.
Wooden pallets are produced with the scrap or cultivated wood,
meaning that wooden pallets are manufactured from a renewable
resource. By using scrap, wood pallets lessen the amount of waste
generation that otherwise would be used as incineration or
landfilling. In addition, less energy is consumed in the production of
wooden pallets and they also produce low carbon emission into air
and water compared to plastic pallets (Hamner and White, 2007).
Therefore, the costs of producing wooden pallets are less and their
impact on the environment is also little. Generally, after using
wooden pallets, they can be reused, remanufactured or repaired,
recycled, incinerated, or disposed to landfilling (Kumar and Putnam,
2008). First, after using for the first time, wooden pallets can be used
again without making any modification. Because the majority of the
pallets will remain unscratched and unbroken. Second, sometime
wooden pallets get damaged when shipping the products. For that
reason, a damaged pallet is repaired or remanufactured by replacing
broken parts with new ones (e. g. new nails, metal brackets, or
board) to make it functional. Thus, their life span can be lengthening
as long as it is possible to repair. Third, when wooden pallets are
severely damaged and cannot be repaired, recycling is the solution.
Recycling of wooden pallets is known as downcycling process. It
refers that wooden pallets are grounded and chipped to produce
wood flooring (Muller and Buehlmann, 2004), the landscape much
(Olawski, 2001), animal bedding, boiler fuel, paper, and furnish for
fiber-based products (NWPCA, 2008). Moreover, after mulching
the pallets steel nails and metal brackets can be recovered and
recycled, and this ultimately saves money and the environment from
misused and pollution respectively. By recycling wooden pallets,
the demand for forest resources can be reduced and the amount of
waste generation will also be decreased. Fourth, when recycling is
not an option, incineration or combustion is used. It refers to destroy
the pallet parts by burning. Under this scenario, pallets are
transferred to a place where they can be combusted. Combustion of
wooden pallets produces energy that can be used for heating, drying,
and generation power (Carrano et al., 2015). Fifth, if there are no
other ways, wooden pallets are used as the landfilling. This
landfilling provides a chance to recover energy since the
decomposition of wood creates methane gas. Therefore, the pallets
manufacturers can be economically benefitted. However, there is
some criticism about the usages of wooden pallets. To produce
wooden pallets, enormous number of trees are cut down which
ultimately bring the destruction of the environment. It is also known
that wooden pallets are responsible for 2% of municipal solid waste
and over 3% of all construction waste (Bush et al., 2001).
Incineration of wooden pallets creates emission of greenhouse gas.
Another criticism of wooden pallets is that their short lifetime,
which is approximately two years.

In conclusion, pallets are indispensable to ship goods from the

manufactures or distributors to the retailers or customers. Various
kinds of pallets are used to perform the transportation task and
wooden pallets remain the most popular pallet in the world because
of its many advantages such as efficiency, strength, durability,
reliability, and safety. Wooden pallets are economical too as its
manufacturing cost is not high. Thus, companies can curtail their
distribution cost by a large margin. Pallets made of wood is also
environmental friendly because they are made from renewable wood
that has been scraped or has been used. They are also recyclable,
repairable and reusable. These distinctive characteristic make
wooden pallets both ecologically and economically better compared
to plastic pallets. However, wooden pallets have some negative
environmental impact too as it generates carbon emission in the
incineration process and also generates solid waste. These negative
environmental effects can be lessened if the companies make their
logistic system more efficient and sustainable by properly
evaluating their all transportation and distribution activities.

Bibliography:
Bilbao, A.M. (2011), “Environmental impact analysis of alternative
pallet management systems”, Rochester Institute of Technology.

Buehlmann, U., Bumgardner, M. and Fluharty, T. (2009), “Ban on

landfilling of wooden pallets in North Carolina: an assessment of
recycling and industry capacity”, Journal of Cleaner Production,
Vol. 17 No. 2, pp. 271-275.

Bush, R.J., Corr, D.T. and Araman, P.A. (2001), “Fewer pallets
reaching landfills, more are processed for recovery”, Pallet
Enterprise, Vol. 21 No. 5, pp. 18-21.

Carrano, A.L., Pazour, J.A., Roy, D. and Thorn, B.K., (2015),

“Selection of pallet management strategies based on carbon
emissions impact”, International Journal of Production Economics,
Vol. 164 No. 1, pp. 258-270.

Clarke, J. (2004), “Pallets 101: Industry overview and wood, plastic,

paper and metal options” PreShipment Testing, pp. 20-30.
Elia, V. and Gnoni, M.G. (2015), “Designing an effective closed
loop system for pallet management”, International Journal of
Production Economics, Vol. 170 No. 1, pp. 730-740.

European Confederation of Woodworking Industries (2011),

“Tackle Climate Change: Use Wood”, Assessed 28 May 2015.
Available at: http://www.cei-bois.org/en/publications

Hamner, P. and White, M. (2007), “Virginia Tech: convergence of

two shades of green–environmental impacts from the manufacture,
use, and disposal of pallets”, Pallet Enterprise.

IFCO (2009), “Factors impacting the environmental sustainability

of pallet programs” (IFCO Systems). (Cited in Bilbao, A.M., 2011)

Kumar, S. and Putnam, V. (2008), “Cradle to cradle: Reverse

logistics strategies and opportunities across three industry sectors”,
International Journal of Production Economics, Vol. 115 No. 2, pp.
305-315.

Muller P, Buehlmann U. From landfill to living room: turning pallets

into flooring. NCSU Bulletin April 2, 2004:3. (Cited in Buehlmann
et al., 2009)
NWPCA (National Wooden Pallet & Container Association)
(2008). Harnessing Our Power. Retrieved 07/03, 2009, Available at:
http://www.nwpca.com/AnnualReport/index.html

Olawski, J. (2001), “Pallet remanufacturer diversifies to handle

growth”, In Business, Vol. 23 No. 2, pp. 16-16.

Twede, D., Mollenkopf, D. and Guzman-Siller, C. (2007), “A

market-driven investigation of pallet trends in grocery chains”,
Journal of food distribution research, Vol. 38 No. 1, pp.161-169.