Wooden Pallets for Start-ups: How to Pack and Ship Your Goods

Many entrepreneurs starting a new business, especially in manufacturing or logistics, have to decide on their own what they will put and ship their goods on.

In some cases, the industry they are entering “imposes” the way goods are packed and/or shipped (for example the automotive industry, where almost everything is standardised: if you want to produce a certain part or assembly, the car manufacturer – the one doing the final assembly – more or less “dictates” how you must pack and ship) the goods delivered to it. In other cases, the entrepreneur has the “freedom” to choose the packing and shipping method, and the customer only cares about one thing: that the goods arrive intact and safely at their destination.

In the second case, although this does not always happen, the entrepreneur should ideally analyse very carefully how the goods they are going to produce will be packed and shipped, for a simple reason: packaging is a significant cost in any company and it has a serious impact on the final price of the product. If you manage to analyse this cost well and optimise it, you have the chance to offer a cheaper product, gain an advantage over your competitors and even earn a higher profit for your own company. The first question an entrepreneur should ask in this second case is simple: what is the cheapest yet equally effective way to pack and ship the goods?

Below we will try to detail, illustrate and clarify every possible way of packing and shipping goods depending on the industry, the distribution model and the way packaging is managed, so that we can best answer the question “how will I pack and ship my goods?” for those who are just starting out, want to open a business and need some clarity on this subject.

One-way or returnable pallets?

Another question the entrepreneur must answer is whether or not the pallet will be recovered from the destination of the goods. Although “light”, single-use (or one-way) pallets are much cheaper to buy and might seem the best solution, returnable pallets can be the cheapest option if they can be recovered and reused several times.

Below is an example in which we assume that a one-way pallet costs 10 RON, a returnable one costs 40 RON, and the return (recovery) cost of the returnable pallet is 3 RON.

From this simple analysis we can conclude that if we expect to use the pallet fewer than 6 times, it clearly pays to buy the one-way pallet, while if the pallet will be used at least 6 times, it pays to buy the returnable one. Of course, as the cost-per-delivery column shows, the more often the returnable pallet is recovered and reused, the lower its cost per delivery (or per use) becomes.

The same analysis shows how important it is to understand, analyse and use the pallet that is cheaper per delivery, not simply the one with the lowest unit price – especially for companies that use thousands of pallets every month in their own logistics operations. Think of companies that ship thousands or even tens of thousands of pallets of goods every month. If, for example, a company uses the wrong type of pallet – a returnable pallet that it only recovers 3 times – the table above shows that it loses 5.33 RON on every pallet of goods delivered. Conversely, if a company uses one-way pallets although its way of working would allow it to use and recover a returnable pallet 10 times (as a competitor might do, for example), it loses 3.3 RON on every pallet of goods delivered. Multiply that by 10,000 pallets of goods delivered each month and it becomes clear that a company which does not think this through when buying and using pallets will lose tens of thousands of RON every month.

Non-EUR pallets or Euro pallets?

Depending on the industry or product(s), and above all on where the goods have to be delivered, a new company may need non-EUR pallets (standard pallets) or Euro pallets.

In terms of overall dimensions, non-EUR and EUR pallets (Euro pallets) can be the same: 80×120 cm, 100×120 cm or 80×60 cm. The difference between the two types lies in the width and thickness of the boards and in the size of the blocks, among other things. You can find detailed information comparing these two types of pallets in a dedicated article on our blog: Pallets vs. Euro pallets.

In most cases (at least in Romania), Euro pallets are required from suppliers delivering to supermarkets, for a very simple reason: supermarkets receive goods from a very large number of companies. If every company delivered on its own pallet, the area where empty pallets are stored would be total chaos and difficult to manage, since it would contain “n” types of pallets from “n” companies. One solution would be for supermarkets to ask their suppliers to deliver on one-way pallets, but this would mean, first, a huge number of pallets that would have to be scrapped and sent to waste – something that should be avoided whenever possible because it is the right thing to do and because it would require a pointlessly large logistics effort – and second, one-way pallets would increase the price of the products they carry, as we showed in the analysis above. Supermarkets therefore chose to adopt a standard, universal pallet – the Euro pallet – on which every company delivers its goods, whatever their type or weight. Euro pallets are ideal for this, which is exactly why supermarkets prefer them. So if, for example, a company supplying soft drinks to a supermarket makes 20 deliveries (20 trucks) adding up to around 700 pallets, once that number of pallets has accumulated in the supermarket’s yard, the supplier sends a truck and recovers all the pallets, which it will of course use again for other deliveries. Another advantage of Euro pallets here is that when the supplier recovers its pallets, since there is only one type of pallet in the supermarket’s yard (the Euro pallet), nobody has to look for exactly the pallets belonging to the company that delivered those 20 trucks of goods. Since all companies use the same pallet, the pallets are simply loaded one after another and it does not matter if some of them came from other companies, because they are identical. The supermarket’s pallet management is therefore simplified as much as possible and, remarkably, the cost per delivery of goods to the supermarket is lower.

Non-EUR pallets, on the other hand, have their own role and usefulness, which is just as important in other industries or activities.
They are mainly used in two situations, and in these two situations it is advisable to use them instead of Euro pallets, because the cost per delivery will be lower:
1. When a company delivers many pallets of goods to a single location where few other companies deliver, so the pallet chaos described above for supermarkets cannot occur, and in a relatively short time enough empty pallets can accumulate there to be recovered. The clearest example is B2B trade. For instance, an assembly plant receives 4 types of sub-assemblies from 4 different suppliers; after unloading the sub-assemblies, it stacks each supplier’s pallets separately in 4 different areas. When enough pallets have accumulated in one area to fill a truck, they are collected by the supplier and reused. In this case, since the pallets are recovered, it is advisable to use returnable non-EUR pallets, which are sturdier, as explained in the table above.
2. When a company delivers a small number of pallets of goods to different locations at longer intervals. In this case it might take years to collect a full truckload of pallets, so recovering them after such a long time would be impossible and also inefficient in terms of cost. One example is a company that ships 1-2 pallets of goods to many different countries – say a pharmaceutical product or certain parts. If a Romanian company ships 2 pallets a month to the USA, i.e. 24 a year, it would be illogical and very expensive to recover those pallets. The same applies to a company delivering one or two pallets of goods – building materials, let’s say – to various small warehouses or construction sites all over the country: recovering the pallets is almost impossible, and even if it were done it would be very costly and not worth it. In this second case it is therefore advisable to use one-way non-EUR pallets.

Wooden pallets or plastic pallets?

Our recommendation is to avoid plastic pallets whenever possible, for the simple reason that they are made of plastic. Wood is a renewable, easily biodegradable and at the same time inexpensive resource. From this point of view, it is clear that wooden pallets dominate the global pallet market for a reason: they are the best solution on this market. Other types of pallets, including plastic ones, exist first of all because of a concrete, practical requirement of a particular market (for example, plastic pallets have become established in the food industry because they are hygienic and can easily be sanitised and reused) and secondly because of trends (pallets made of pressed wood chips or cardboard, for example).

In our article Wooden pallets vs. plastic pallets you can read in more detail about the similarities and differences between the two types of pallets. In the table below we explain when an entrepreneur starting a business needs wooden pallets and when plastic ones: