For all the underappreciated parts of the supply chain, no item could be more accurately called its Rodney Dangerfield than the ubiquitous wooden pallet.
Often tossed aside, left outside or simply burned, the pallet serves only one purpose. Yet without it, global commerce might come to a screeching halt.
Talk about getting no respect.
The history of the pallet goes back almost 100 years or perhaps even more as some online searches indicate it may date to the 1880s. Regardless of when the pallet was introduced, this collection of wood and nails arranged in such a way to enable goods of considerable weight to be stacked several feet high has become as important an item to moving freight as any in the supply chain.
But at the end of their shifts, pallets are often tossed aside. Many are reused and sold between companies that have excess and those in need. Some, though, are just thrown behind a building where they become bike ramps for neighborhood kids or firewood for bonfires.
There are thousands of small businesses around the country that collect pallets, fix them up and resell them to other businesses. This process is repeated daily and usually in a manual manner. With few national pallet resale shops, the pallet secondary market truly is local.
That could be changing.
On Thursday, PalletTrader, an e-commerce marketplace for pallet sellers and buyers, announced its official unveiling, seeking to make the entire process of buying and selling pallets as easy as shopping on Amazon.
“Most pallets are sourced and delivered within 50 miles — that is usually the sweet spot — because there is not enough value to ship them across the country,” said John Vaccaro, who is behind PalletTrader. “It’s a local business delivering to a local business.”
Vaccaro may be a name those in the industry recognize. He serves as president of Bettaway Supply Chain Services. In 1995, Bettaway, which includes five separate operating companies, created Bettaway Pallets Systems. Initially started as a value-added service, the company became one of the few national pallet exchange programs.
In an interview with Modern Shipper, Vaccaro stressed that PalletTrader is a separate entity and not affiliated in any way with Bettaway, although Bettaway Pallets uses the platform to exchange pallets, along with about 20 other “depots,” or smaller pallet exchange businesses.
PalletTrader has been operational behind the scenes for almost two months now, having conducted thousands of transactions already. It was in development over the past 2½ years, with Vaccaro estimating about 20,000 hours have been invested in testing.
Vaccaro said the idea came to him about four years ago when he realized there was no online marketplace for pallets despite their wide use and reuse.
“We could have taken the mega online e-commerce brokerage path … but that’s not what I thought was right,” he said. “I thought marketplaces would prevail. I thought making a neutral platform where anyone can go on and sell [was best].”
The concept for PalletTrader is pretty simple and doesn’t change the dynamics of the resell market. It simply moves the process online.
The same business that currently collects, fixes and sells pallets can simply post those on PalletTrader for sale, along with the asking price. But, unlike the current process, a buyer is able to purchase these pallets with a few clicks and money changes hands. There is no waiting for a purchase order to be produced, a check to clear or a payment not arriving. It is all handled as easily as any purchase made through any e-commerce marketplace.
“The way pallets get transacted now, most large companies do their purchasing in a centralized manner. Pallets are decentralized,” Vaccaro said.
Don Vultaggio, chairman of Arizona Beverage Company, which buys hundreds of thousands of pallets annually to ship its iconic iced tea products, believes the industry has long needed a platform solution like PalletTrader.
“Pallets are a necessary cost of doing business,” Vultaggio said. “There’s been this dilemma in the market for years around how pallets are purchased. Where do I find them? Am I getting a fair price? How do I recover and reuse them? [With PalletTrader] now you can go to a single market online, see supply and pricing in one place, anywhere in the U.S. If it’s where you need it at a good price, you take it. Simple, clean and efficient — and everyone in the supply chain benefits.”
Vaccaro believes the market for PalletTrader includes about 500 million pallets in an estimated pallet pool of about 1 billion. Many are in rental pools, meaning they are owned by an entity that rents them out for use. PalletTrader is targeting the “white” pallet market — those that have no single owner and simply are bought and resold as needed.
He estimated there are about 1,500 pallet “depots” in the U.S. with as few as five customers and as many as 1,000, most transacting business as they have always done. Because many of the pallet depots are small, their growth is also limited. Vaccaro said PalletTrader allows them to expand beyond their local area and find new customers without the cost of adding sales staff.
“Pallets are as big as trucking, ocean freight [and] rail put together,” Vaccaro said. “Everything moves on pallets, yet there is no e-commerce. What we are doing with PalletTrader is not just bringing to market a marketplace, we are bringing a [transportation management system for pallets].”
PalletTrader collects a 3% fee on each transaction — 1.5% from each side — to support the business, but the public-facing process allows buyers to shop for the deal right for them. There is also a private functionality to conduct business between a buyer and seller behind the scenes. Companies that have a preferred vendor or customer may choose this option, Vaccaro said.
The site is searchable, depending on the size of the pallet or other customization needs, and offers online tools to help manage pallet purchases and sales. For sellers, it also eliminates the need for credit checks, reduces the need for outside sales and allows businesses to sell off excess pallets, recouping expenses on a product that has more than doubled in cost in the past two years.
Among the early participants on the platform are what Vaccaro called its “Founders Circle” of companies. These include major pallet management firms, manufacturers, recyclers and distributors, including Paltech Enterprises, John Rock Inc. and San Fernando Valley Pallet Services.
Vaccaro said PalletTrader is capable of handling wood pallets but also those made of plastics, composites or other materials — and in all sizes. He added that the online component could result in back-office cost savings for businesses selling pallets and lower expenses for businesses that use pallets and can recoup some of that money through the marketplace.
There are no monthly fees or subscriptions (other than the transaction fee) for companies that sign up in the first six months following the launch of PalletTrader.