When plastic and steel are more 'palletable' than wood

Published on Business Desk, by Brent Melville, Friday 6 January

A startup up recyclable pallet company that tapped into local intellectual property and funding streams has moved its manufacturing operations to the UK, enabling the production of up to 240,000 pallets annually.

Pallet Earth, a five-year-old company based in Auckland, had developed a composite, reusable pallet product using recycled plastic and steel.

It believed the system would compete well with the traditional ‘one way’ wooden pallets and help reduce carbon emissions.

The Auckland-based firm, which received a $136,127 project grant from Callaghan Innovation and worked alongside Auckland University’s faculty of engineering and British roll-forming specialists Howick Ltd, estimated its potential global market at about two million pallets operating under a rental model.

Its current capacity would be about a quarter of a million units at contract manufacturer RGE Engineering in Peterborough in the United Kingdom.

Pallet Earth's CEO, Dave Cashmore, said the company had located its production offshore as neither New Zealand nor Australia had the capability to produce the pallets.

The UK was also closer to target shipping routes and raw materials, and the UK standard pallet size, at 1.2 metres by 1.0m, was the most commonly used in international shipping, he said.

Chopping emissions

UK-based Precedence Research estimated there were more than five billion pallets in use globally, of which about 40% were used in North America. It was also a major growth market, with e- commerce expected to drive growth from its current US$73 billion (NZ$117b) to US$124.9b by 2030.

About 97% of pallets in use were wood, with the majority used for one-way trips, and then either chipped, destroyed or burned – resulting in high levels of carbon emissions.

Pallet Earth was going through trials with fresh fruit produce distributors through both Asia and Europe and Cashmore said the system had also garnered significant local interest, though NZ was “not the core target market”.

Outside of its strength, based on an internal steel frame, the product had an interlocking system that allowed for safer transport – as many as 50 pallets at a time, compared with a maximum of 15 stacked wooden pallets.

Cashmore said the use of the recycled pallets could reduce ‘per trip’ emissions released from 12 kilograms for a wood pallet from Asia to Europe to 3kg. And while the upfront rental cost was higher than the traditional wooden pallet, analysis by value chain consultants Incept had determined long-term costs equated to about £4 (NZ$7.65) per trip, about half the current UK cost for a wooden pallet.

Tracking

The pallets also came equipped with 4G trackers, at a cost of about 2 US cents per day, which allowed customers to track the location, temperature and overall condition of their produce.

Cashmore said the group would move into full manufacture this year and was likely to have a “full order book” for the next several years for its single product line based on early discussions with clients. Funding, however, was in place for four lines.

The firm’s umbrella company was RDP Group, which had an investor base of 34, primarily NZ- domiciled investors.

Its biggest shareholder, with 35.9%, was Auckland businessman Mark Ching.

The firm was chaired by Graeme Wong, a former director of Sealord Group and Tourism Holdings and who currently sat on the board of Harbour Asset Management and NZX-listed Precinct Properties.

Brent Melville
Senior Journalist

For the original article - click here

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