What Is The Most Important Object In The Global Economy?

Pallet

It’s an object that goes largely unnoticed in everyday life and yet surrounds us every day. There are billions around the world and is a simple construction of wood. It is the pallet.

Pallets began life as simple wooden ‘skids’ which had been used to transport goods from ship to shore and vice versa. It improved shipping efficiency immediately. According to an article in a railway trade magazine from 1931, it took three days to unload a single boxcar of canned goods without pallets. When the same amount of items were put on pallets or skids and loaded, it only took four hours.

That was simply the beginning for the life of the pallet though. What led to it becoming so integrated with modern life that we don’t even notice it? In a conference paper by USDA Forest Service researchers Gilbert P. Dempsey and David G. Martens, there were two main factors leading to the rise of the pallet.

The first factor to play a part was the invention of gas-powered forklifts in 1937. The second was World War II. Pallets played a huge role in the supply chain of the war efforts. The military required their supplies as quickly as possible and as efficiently as possible. Pallets afforded them both ideals by improving turnaround times and allowing for more efficient packing and thus more supplies in each supply run.

Fast forward to today and this seemingly irrelevant invention is even dictating how products are designed. Ikea, that Swedish furniture giant, have designed products around pallets, such as its “Bang” mug. This mug has been through three redesigns, simply to ensure that more mugs would fit on a pallet. The result? Originally only 864 mugs would fit on a pallet, after the redesigns, a pallet can now hold 2, 204 mugs.  This created a 60% reduction in shipping costs for the company.

The Pallet Debates

While the design of the pallet is simple enough, these objects have had such an effect on the global economy that they do come with their own share of debates.

First there is the pooled pallet vs. one-way pallet debate. Pooled pallets are pallets which are rented from a company who then takes care of delivering and retrieving them whereas one-way pallets can be scrapped, recycled or reused when its initial journey is done. The argument is that pooled pallets are clearly more environmentally friendly, but are they the best option for a business’ profit margin?

Another debate currently occurring in the pallet world is over the different designs of pallets being used. In Europe and other parts of the world (including South Africa), block pallets are the norm. In America however, most businesses continue to use the four-way pallet which was created during WWII. Last year retail giant Costco switched to block pallets because they found the four-way design to be inefficient for their needs. Unfortunately, block pallets cost more to build and the economics of switching over has resulted in no other companies following in Costco’s footsteps.

A big problem in the pallet world is currently a lack of standardisation. In the United States, pallets are measured in inches. In Europe they are measured in millimetres and are 1000mm by 1200mm. In Japan, another country which uses the metric system, the pallets are 1100mm by 1100mm. While this is fine in each country, when you have supplies crossing borders and possibly switching pallets, packing the same amount of supplies becomes a problem. In other words, some people feel that a standard needs to be adopted around the globe.

Plastic or wood, pooled or one-way, the pallet in every shape and form remains the single most important object in the global economy and without them, most of what you’re wearing right now or ate for breakfast this morning would not have gotten to us as easily as they did.

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