The pallet industry is built on the foundation of recycling. Across the globe, there are companies loading trailers with junk pallets and sending them to pallet recyclers. The difficulty for every company is knowing if their “junk pallets” are valuable. Once the pallets go to the recycler, the company is at the mercy of that pallet recycler’s sort criteria and process. The fact is that the pallet company has all the power and leverage in this recycling relationship. Pallet companies count and grade your pallets and then pay you for the pallets they deem valuable. This power has a very negative reputation in some people’s minds because of how certain companies have abused it. Yet, certain safeguards and sets of information can help you ensure you are getting your pallets properly sorted. Here are a few nuggets of sorting information that should help you discern the best place to recycle your junk pallets.
The Essential Sort Criteria:
The first decision point is the basic style of the pallet. Pallet companies are always looking for the standard 48x40 GMA 4-way pallet. These are the most valuable pallets to recycle. Yet, each pallet company may have other styles of pallets that they can recycle. It could be a different footprint (i.e., 48x48, 48x42, etc.). It could also serve a different purpose. Many pallet recycling companies dismantle pallets and harvest good lumber to repair other pallets. These “teardown” pallets are valuable because of the cheap lumber they offer. Lastly, a pallet company deals with the most unusable pallets. The two ways of handling unusable pallets are to grind them in wood fiber material on-site or at another wood recycling company. At this first juncture, the main question is whether the core of the pallet has the potential for repair and resale.
The second decision point is the quality of the pallet. Sort crews will examine the pallets that have the potential for repair. The two aspects to consider are the deck boards and the stringers. The sort crews determine how many boards the repair requires for the pallet to be in sound structural condition. Many companies will repair anywhere from 3-5 boards on any of these GMA pallets. They will also determine if the stringers are sturdy. If a stringer has any significant crack or missing piece, a plug must be installed to strengthen the pallet. When a plug is installed on a GMA pallet, it drops from a #1/A grade pallet to a #2/B grade pallet. If these pallets need significant repairs for the boards or stringers, the pallet will become either teardown or grinder. At this point, it will lose all its value.
The Unique Sort Processes:
Pallet companies also have two distinct processes for handling their sort process. The first process is to pre-sort the pallets before they are sent to a repair bench. The second process is to sort at the repair benches. Both offer advantages and disadvantages. Moreover, both will affect how you are paid for the pallets you recycle.
For the first process, pallets are sent to a sort crew and processed so that the repair benches only receive the specific pallets already deemed ready for repair. A major advantage of this process is that the sorting crew can also find pallets already in good condition and put them directly into inventory to be resold. These finished pallets avoid the extra cost that sending them to the repair benches would entail. This process also allows the pallet company to pay their vendors different prices for finished and unfinished pallets.
The second process skips the sorting crew and sends your pallets directly to the repair bench. The pallets are sorted at this point. This setup has the advantage of skipping the costs of a separate sort crew. Yet, this process does not have clear data on which pallets are finished and which are unfinished. In this system, all pallets get processed as if they were unfinished.
Neither of these processes is better or worse. It is good to realize that some companies present pricing for junk pallets in different ways because of their unique system of operation. The key is not the dollar number they offer on their bid. The real facts are found in the dollar number on the check they send you for your pallet load.
Practical Tips:
Because of the different possible sort criteria and processes, we recommend doing at least one trial load with any prospective pallet company. You can then see how their numbers on paper compare to their actual counts. You also get a great opportunity to see how they document the sort numbers and give you transparency. You should always have a reference number for every load you have sent to a pallet company. That number should be traceable directly to the check to be cut. This lets you keep all loads well documented and ensure none go missing.
Sorting pallets is a simple process. It should be a healthy topic of discussion between you and your pallet recycler. You can ask about the number of boards they will repair. You can ask about the quality of stringers that will need a plug. You can ask if they pre-sort or go to the repair benches with the pallets. Further, you should be able to receive detailed reports of the specific counts for any load you send them. Beyond this, every load you send to your pallet company should receive a reference number that your accounting team can use to trace payment.
With this information at your disposal, you are now empowered to avoid being a victim of an imbalanced leverage relationship. Visibility and transparency are possible with your pallet company. You know what is valuable to them. You can negotiate fairly and honestly.