Ikea to start using paperboard-based alternative to wood pallet that is lighter, thinner, saves 10% in transport costs but can only be used one way, then re-pulped; IPP Logipal to start producing them in Germany

LOS ANGELES , November 4, 2011 () – Ikea Group will begin using a paperboard-based alternative to wood pallets starting in January, expecting that the switch will save 10% in transport costs, reported Bloomberg News on Nov. 3.

Made from corrugated containers, the new pallets designed by Ikea are lighter and thinner than the wood ones, although they can only be used one way and then have to be re-pulped, the Swedish furniture retailer said.

Compared to traditional wood pallets, Ikea’s are one-third as tall and 90% lighter, which the company estimates will save €140 million (US$193 million) annually in transport costs, according to the article, which was carried on SFGate.com.

Although Ikea says its design can support a load of 750 kilograms (1,650 pounds), CHEP does not consider it durable enough for pooling, said James Hall spokesperson for CHEP parent Brambles Ltd., Sydney, Australia.

Pooled-pallet leader CHEP does not use pallets made from paperboard and does not plan to, said Hall. Pooled pallets got their name from Australia's Commonwealth Handling Equipment Pool.

Ikea’s new pallets are suitable for “something really light,” but wooden ones are better for heavier products, said Russell Shaw, a MacQuarie Group Ltd. analyst, Bloomberg reported.

However, Jeanette Skjelmose, sustainability manager at Ikea's supply-chain unit, said her company’s paper-based model has the same limitations as wood pallets, if stacked properly.

IPP Logipal, part of Europe’s largest pallet maker Faber Halbertsma Group, has begun producing paper pallets in Goch, Germany, and might expand to France, Belgium and the Netherlands next year, said Ruud Schrama, the company’s marketing manager.

The company plans to triple or quadruple that business within five years, he said but declining to give details, reported Bloomberg.

Ikea itself is not certain if its new pallet will be “the ultimate solution, but it’s better than wood,” said Skjelmose.

The deciding factor will be whether the transport savings from the lighter pallets outweigh the expense of discarding them after one use as compared to the multiple trips wood pallets can endure, said Jeff McBee, pallet analyst at Industrial Reporting Inc.

McBee expects paper-based pallets might see the same fate as the thousands of plastic pallets CHEP tried 10 years ago and later abandoned, Bloomberg reported.

The primary source of this article is Bloomberg News, New York, New York, on Nov. 3, 2011.

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