If you’re in the export trade, isn’t it common to stare at your bills and fret?Presswood pallet cost look insignificant, but the math always makes people sweat. I have a friend Lao Zhang, opened a small factory to do electronics exports, the annual pallet expenses will be tens of thousands of dollars. He told me a scene: the warehouse is full of traditional wooden pallets, taking up space, not to say, but also have to spend money on fumigation, catching up with the tight schedule, fumigation can not line up, the customer phone call to urge him to sweat. Later he complained to me: “If the cost of this pallet can be reduced, I can take a few more business!”
Do you also have this feeling? Procurement of pallets when the calculation, the unit price does not seem high, but coupled with the fumigation fees, transportation costs, and bad replenishment costs, a year down the bill more than let a person gasp. Especially the freight costs have risen sharply, the profit is already thin, and then these “invisible costs” nibble a bite, it is a bit unbearable. I also struggled with this problem, and then talked with peers, only to find that there is a way to put this cost down hard – with presswood pallet. today I will break it down with you, to help you calculate this account, see if you can let you breathe a sigh of relief.
Where exactly does press wood pallet cost come from?
Don’t wait to see the solution, we have to find out where the money is spent. Let’s take the traditional wood pallet as an example and figure out how it empties your pocket a little bit:
When · buys it: a regular wooden pallet is about $12 (between $11.25-$12.50 depending on the average market price), and 1,000 of them is $12,000 USD. That’s still cheap, right?
- fumigation pit: exports have to comply with ISPM15 standards, each pallet fumigation fee of 5 U.S. dollars, 1,000 is 5,000 U.S. dollars. This is a lot of money to spend, because customs will not release the goods without fumigation.
- can not be used for a long time: wooden pallets last up to 3 years, wet weather easily deformed and cracked, bad also have to replenish the goods. 3 years for a change, 10 years is 4 rounds of procurement, just to buy a pallet of 48,000 U.S. dollars, plus 20,000 U.S. dollars in fumigation fees, a total of 68,000 U.S. dollars.
- Warehouse invisible account: wooden pallets stacked to take up space, a pallet height of 15 cm, 100 will be 1.5 meters high, the warehouse rent at $ 50 per square meter per year, accounting for more than 10 square meters a year is $ 500, 10 years $ 5,000.
Add up, 1000 wooden pallets 10 years of total cost is 73,000 dollars, an average of 7300 dollars a year. That’s not counting the payout for bad pallets that hurt the goods, or the cost of nails that workers get when carrying them. Mr. Zhang told me that his annual cost of pallets is more than 6,000, but with the addition of these “miscellaneous”, the actual almost 8,000.
Change of mind, how much the cost can be reduced?
Later I talked to a Ningbo counterpart Li, she does furniture exports, before the cost of the pallet was also tossed by the light. She said: “the previous wooden pallet, fumigation fees and bad replenishment costs add up to drive me crazy. Then I switched to presswood pallet, and it felt like a big burden was lifted.” She broke down the math for me, and I listened with relief for her:
- The purchase price was about the same, but the savings were big: the presswood pallet costs $15 per unit, a little more than a wood pallet, but it’s inherently fumigation-free, saving $5,000 in fumigation fees for 1,000 of them. It’s $15,000 when you buy it, which is 3,000 more than a wood pallet, but that 3,000 will be earned back later.
- Life expectancy is half as long: Li said the pallet can be used for 5 years, more than the wooden pallet to last two years. 10 years as long as the replacement of 2 times, a total of $ 30,000 in purchasing costs, fumigation fees of $ 0, a total of $ 30,000, more than half of the wooden pallet to save more than.
- warehouse space to save money: 25 presswood pallet stacked less than 1 meter high, than the wooden pallet to save 4 times the space. 1,000 pallets originally accounted for 150 square meters, now accounts for only 40 square meters, the annual rent from 7,500 U.S. dollars to 2,000 U.S. dollars, 10 years to save 55,000.
Calculated, 1000 presswood pallet 10 years total cost is 30,000 (purchase) + 20,000 (rent) = 50,000 U.S. dollars, an average of 5,000 U.S. dollars per year. That’s $2,300 less than the $7,300 for a wood pallet, a 31% drop. Lee says she actually saves more because the pallets don’t break, and there are fewer restocking fees and customer complaints, which works out to more than $3,000 a year, almost 40%.
To break it down a bit more, how exactly was it saved?
You may be thinking, that’s a great sounding account, but how exactly is it saved? I’ll take these pieces apart and tell you the logic behind it:
- Fumigation fees directly to zero
Wooden pallets have to be fumigated, 5 dollars a run, 1000 is 5000 dollars. presswood pallet is a high temperature and high pressure to the wood chips pressed out, born in line with the ISPM15 standard, no fumigation, not a penny to spend. Old Zhang said: “Before the fumigation queue a few days, I can’t sleep in a hurry, now directly loaded away, it’s too good.”
- Buy fewer times, save big money!
Wooden pallet 3 years a change, 10 years 4 purchases, 48,000 U.S. dollars. presswood pallet 5 years a change, 10 years 2 times, 30,000 U.S. dollars, direct savings of 18,000 U.S. dollars. Li counted, she originally made up 200 pallets per year, now almost no need to make up for the purchase of less than one-third.
- Warehouse rent secretly save a
Wooden pallets are stacked to take up space, 1,000 of them take up 150 square meters, the annual rent of 7,500 U.S. dollars. presswood pallet stacked tightly, 1,000 of them take up 40 square meters, the annual rent of 2,000 U.S. dollars, a saving of 5,500 U.S. dollars. Her warehouse is half empty, 20 more containers of storage space, business can be a few more orders.
- Less bad, less compensation
Wooden pallets are easy to crack, wet days are worse, Li once due to bad pallets lost customers 2000 U.S. dollars. presswood pallet waterproof and insect-resistant, 5 years have not been bad to save the compensation and labor maintenance costs she can not count, but she said, “at least the heart is not panicked”.
What about plastic pallets? Compare and contrast!
You may have heard of plastic pallets, which are also fumigation-free and have a life expectancy of up to 10 years. I did the math: $30 for one, $30,000 for 1,000, $20,000 for 10 years of rent, $50,000 total cost, about the same as a presswood pallet. But the plastic pallet is expensive in the front, a one-time shell out 30,000, small companies can not carry the cash flow. presswood pallet 15 U.S. dollars a, bought in two times, the cash pressure is less than half. Li said: “I have a tight budget, the plastic pallet is not good enough to use, presswood pallet is just right.”
You might want to try this too.
I’m not telling you to change anything right away, I just think this approach might actually help you. Do the math: how many pallets do you use per year? How much did it cost to fumigate? Is the warehouse rented out because of too many pallets? Lao Zhang tried it and told me, “If I had known this was available, I wouldn’t have had to work so hard in previous years.” Little Li also said, “The accounts are clearer and business is 30% easier.”
How about you? Aren’t you also a little tempted to try this method to keep costs down? I’m guessing in your mind you’re probably thinking, “Well, that’s so true, I’ll have to do that to make it work.”
