Managing the Cost of Pallet Use: IoT Tracking for Reusable Pallets


Would you believe that the global market for pallets is now valued at $89 billion? The biggest growth trend in the pallet market is reusable plastic or composite materials.

Reusable pallets are increasingly being used in logistics. Replacing typical wooden pallets, plastic, composite, and aluminum pallets have become the choice for many manufacturers and shippers due to their durability and lower total cost of pallet ownership. As lumber prices skyrocket, cost is becoming an even bigger driver of adoption.

Reusable pallets are stronger, cleaner, and less wasteful than their conventional counterparts. In a society paying more attention to environmental issues, these pallets are also helping to reduce the depletion of natural resources.

Eco-Friendly Pallets Using Sustainable Materials

There are nearly two billion wooden pallets in circulation in the U.S. Approximately half a million new wooden pallets are produced each year to replace those that get damaged or worn out. One estimate shows that as much as 50% of the country’s entire hardwood harvest goes to producing these wooden pallets — a million acres of trees. Many are discarded after a single use. It’s incredibly wasteful.

Reusable pallets have the advantage of being more eco-friendly. They may handle as many as 75 to 100 trips through the supply chain. This results in less waste as one of these returnable pallets may have as much as a five-year life span.

Switching from wood to plastic, aluminum, or composite materials also makes for lighter-weight pallets that are extremely durable. They also don’t absorb water, something that can make wooden pallets even heavier. This weight reduction means lighter loads on trucks which translates to reduced fuel consumption, lower transportation costs, and lower carbon dioxide emissions.

When plastic, composite, or aluminum pallets finally reach the end of their lifespan, it’s possible to recycle them into new products — something you can’t do with wood.

Other Advantages

More resistant to pallet damage, reusable pallets are also considered more hygienic. They are chemically inactive and easy to sanitize. Unlike wood pallets, they resist insect infestations. Some may contain antibacterial additives to reduce any risk of contamination. This has made them very appealing for use in the shipping of fruits and vegetables, medications, and other fragile products.

Reusable plastic, composite, or aluminum pallets don’t splinter like wood pallets. This reduces damage and potential injuries due to slivers or exposed nails.

New Challenges of Reusable Pallets

While reusable pallets have a host of benefits, there are some challenges associated with reusing pallets. Composite pallets are generally more expensive than wooden pallets, but they tend to have a lower total cost of ownership over time since they are re-used.

Reverse Logistics

Reusable pallets have much higher value, so you can’t afford to lose them. If they do not stay in rotation in the supply chain, you’re wasting money.

Returnable pallets need to be reused for additional shipments or returned to their origin points. This can be either the manufacturer, shipper, or pallet rental company. Logistics can get even more complicated when there are two or more parties in the supply chain.

For circular supply chains, forecasting is important, because the number of available pallets needs to be calculated to balance the risk of pallet shortage with the financial loss of excess, unused pallets.

When there is a breakdown in the return process, there may not be enough pallets for the manufacturer or shipper to fulfill new orders. This has happened during the COVID pandemic when there was a huge demand for products such as toilet paper. Some suppliers have had a severe shortage of pallets preventing them from shipping needed goods to market.

Lost Pallets

Pallets tend to accumulate at the receiving end, especially if the receiving party does not have a business process for returns in place or an incentive to return the pallets. A challenge of protecting your investment is knowing how to keep track of pallets in the supply chain.

Your pallets may be lost or just sitting in someone’s warehouse. You need visibility of all origin and destination points to manage reverse logistics efficiently.

Unknown Pallet Condition

If, when pallets are finally returned, they are damaged, it’s also a significant problem. While composite pallets are more resilient and durable than wood pallets, damage can still occur. You need a way of knowing which pallets are in good condition and which will need replacement.

A lack of visibility on pallet condition can lead to an inefficient or inadequate pallet replacement strategy, making it difficult to keep your facility running smoothly.

Ad-hoc replacement when the pallet handler decides through visual inspection that the integrity of the pallet has been compromised has flaws. It depends on the goodwill and accuracy of the person doing the visual inspection, who may not be accountable to you. They may report everything is fine when, in reality, pallets should be marked for replacement.

Pallets are also sometimes marked for replacement simply because they’ve reached a certain age. However, in many cases, these pallets are still in good shape and reusable.

Pallet Audits

All of the challenges associated with returnable pallets necessitate regular pallet audits for tracking and identification purposes. However, audits are time-consuming and may be ineffective. Pallets in transit can be easily missed in inventory counts.

The Solution: Smart Pallet Tracking

The solution to overcoming the challenges around reusable pallets is smart pallet tracking using RedLore’s Smart Pallet tracking technology.

Track My Pallet: How Pallet Tracking Works

RedLore’s Smart Pallets each have an Internet of Things (IoT) device integrated into them. This IoT pallet tracking device monitors the location and condition of the pallet.
This system solves two of the reusable pallet challenges by providing greater visibility on pallet track and status.

Pallet tracking with RedLore provides an end-to-end tracking and monitoring solution:
● Trackers are added to pallets at the origin point.
● Trackers can detect when goods leave their origin points and track location and condition in real-time during transit without needing any additional truck or trailer infrastructure.
● When pallets are delivered to a mid-point or their destination, trackers continue to monitor the pallets, whether they are stored inside or outside.
● Data and events are sent to a cloud logistics engine for processing and storage.
● Users can visualize pallet inventory with the RedBoard dashboard pallet manager software and share it seamlessly with most ERP, EMS, TMS, WMS, and RTTV systems.

Tracking happens automatically, in real-time, without human intervention. Included AI technology can also predict anomalies such as temperature fluctuations.

Tracking Pallets in Transit

About $225 billion is lost every year due to a lack of visibility in supply chains and logistics. Most tracking solutions focus on vehicles or containers rather than tracking individual assets.

Smart Pallet management software can display the information generated from individual tracking tags even when in transit thanks to built-in LTE-M, GPS, and Wi-Fi positioning. As opposed to other technologies, such as LORA and Sigfox, you get global connectivity. You also get a significantly longer battery life than devices using older 2G or 3G technology.

Tracking Pallets On-Site

Warehouse pallet tracking is also easy with Smart Pallet tracking technology. When pallets are on an industrial site, tags can be monitored on-site using real-time location systems (RTLS) to automatically identify and track pallet tags.

Monitoring Pallet Conditions

Another major advantage of RedLore smart tracking solutions is that you can monitor the condition of your pallets to detect damage — even damage that might pass visible inspection.

You will be able to determine if a pallet has been damaged through:
● Vertical falls, such as being dropped or having heavy objects fall on it
● Horizontal impacts, such as being hit with a forklift
● Temperature or humidity variations, such as those that might affect perishable goods like produce, food, drinks, flowers, or pharmaceuticals

Sensors can also track:
● Tilt
● Vibration
● Tampering
● Volatile organic compounds (VOCs)

You will also be able to track a pallet’s orientation. In addition to informing you about the condition of orientation-sensitive goods, you can use this ability to find when pallets are in use and when they are being stored. Pallets are typically stored vertically to save room.

Touchless Process Management

In transit and on-site location and condition monitoring offers the additional benefit of touchless process management. Logistics processes today rely on manual barcode scanning or RFID scanning of shipping labels attached to the goods on the pallet. The RedLore IoT technology does away with manual scanning by detecting automatically when a pallet leaves the origin, arrives at the destination, or is erroneously dropped off at an incorrect location.

Touchless process management reduces human error. Alarms can be pre-configured to notify you when certain events occur.

Protect Your Reusable Pallet Investment

With RedLore’s Smart Pallet technology, you have an instant pallet finder. You will always know where your pallets are, what condition they are in, and whether they may have suffered any damage.

Reusable pallets are more expensive up front, so you need to protect your investment. When you can keep track of your pallets and monitor their conditions, it helps extend their life span so you can realize the long-term cost savings.

Deploying reusable pallets with smart technology helps protect your investments and better maintain your inventory to keep the supply chain moving smoothly. For more information about pallet tracking solutions, contact RedLore today.