White Exchange Pallets
Five major problems FMCG companies in Poland face when using white exchange pallets are fraud or counterfeit pallets, the ending of the EPAL/UIC exchange agreement, overall pallet exchange bureaucracy, shortages and price increases and the high costs of maintenance and inventory management systems.
- According to one source, "fake" pallets are an issue in Europe. The EUR/EPAL pallet has strict guidelines, but counterfeits that mimic certified pallets can cause significant issues for companies.
- Poor wood quality, low quality assembly and bad chamfers cause these pallets to crack or fall apart during loading/unloading, which can damage the merchandise.
- Additionally, these pallets can also harm workers if they crack or break during loading/unloading.
- If counterfeits pallets are found, the load is seized by authorities, which can also cause significant issues for the company (inadvertently) using them.
EPAL/UIC Exchange Agreement
- In 2017, the European Pallet Association (EPAL) ended its agreement with the Union of Railways (UIC) for exchangeable pallets.
- This termination happened due to the high levels of counterfeit pallets coming into the EPAL pool, so the UIC wanted to protect its stock integrity.
- For companies like FMCG companies, this increased difficulty in the export market, as some retailers now refuse to accept UIC pallets (since they can't be easily exchanged).
- Additionally, companies in Poland would face issues with importing materials from certain countries (like Austria, Spain or Scandinavia) that use UIC pallets.
- The end of the exchange exacerbates the already complicated pallet system in Europe where at least three different pallets types are used but not exchangeable.
Overall Pallet Exchange Bureaucracy
- Even prior to the exchange agreement termination, pallet-using companies, like FMCG manufacturers, faced complicated pallet exchange bureaucracy and still do today.
- The rules and regulations surrounding pallet exchange are complicated, and logistics providers struggle to keep up.
- For example, "The requirement for the lorry driver to transport 33 exchangeable Euro-pallets is possibly the most frequent problem, since the lorry has to offer simultaneously full capacity if no palletized goods are to be transported. Especially in international traffic, changing conditions are to be expected. If the driver does not carry any empty pallets to exchange, because he received none at the last unloading point for example, he is then in debt with the following loads and is committed to deliver them at a later point."
- This applies especially to Poland as it is positioned as a transport gateway between Western and Central Europe and Eastern Europe and beyond.
Shortages and Price Increases
- The prices for white exchange pallets has increased around 10% in the past year due to increased raw material costs and supply issues.
- Poor weather in 2018 led to less logging and less sawmill activity. This increased the overall price of wood in Europe.
- Furthermore, Chinese companies are increasingly buying European pallet stock, as there is very little domestic pallet production in the country.
- As the economy improves across the EU, demand for pallets is increasing, yet supply is not keeping up. This has also driven up prices.
- Additionally, the price of nails and transport has also risen, contributing to overall costs.
High Cost Maintenance and Inventory Management Systems
- One Polish food and beverage manufacturer, Refresco, reported that white exchange pallets gave them issues with inconsistent quality, high maintenance costs and complex inventory management needs.
- This is because white exchange pallets are owned, rather than rented, so a (FMCG) company has to manage the pallets themselves rather than being outsourced.
- The Polish FMCG industry reports that poor pallet management systems are a big issue losing them money.
- For example, Polska Woda, a bottled water company, reported that it had increasing problems recovering its owned pallets in good condition. It had to waste employee time and wages on managing its pallet inventory and pay supply chain partners incentive money to persuade them to return their pallets in good condition.
- Another major problem is incorrectly classified pallets that are advertised new but show up damaged or broken.
- Wooden pallets, widely used in the white exchange system, have to be maintained more and less durable.
Information regarding Poland specifically was not widely available. Therefore, we looked at Europe as a whole, and central Europe when possible, in order to get an idea of major problems FMCG companies could have when using white exchange pallets.