Problem: We handled reverse logistics for Walmart for fifteen years dealing directly with all the problems in supply chain management and discovered there is one major problem that stands out among all others: wooden pallets.
Most people don’t realize that they pay twice as much as they need to for everything they buy simply because of wooden pallets. Hard to believe? Let’s look at some background so you can begin to understand why we would make such a statement.
Wooden pallets came into wide use during the second world war and it is estimated that there are currently about 5 billion pallets in use globally at any given time. About 500 million pallets are produced each year in the U.S. alone just to replace the pallets that are discarded or no longer fit for use. Wooden pallets use more of the annual hardwood harvest than all other uses combined. That’s over 50% of hardwoods felled every year! They’re difficult to recycle because of the nails that hold them together and many are chemically treated to limit bug infestations or for phytosanitary requirements between countries.
But the biggest problem with pallets is the industry that grew up around them since the end of the war. The entire industry is one of the most inefficient creations ever developed by man because it’s built entirely around the wooden pallet. Anyone in the industry will tell you that the picture on the left happens way more often than you can imagine. Actually, freight damage is a $50 billion dollar problem annually for retailers and guess who ultimately pays for this problem? It’s a cost of doing business for retailers so they just include it in the price they charge consumers. The industry also spends $20 billion annually just to re-position pallets and intermodal steel shipping containers to where they’ll be needed next and consumers end up paying for all of it.
Pallets may have been a good idea in their day but, if you’re going to ship something on a pallet then you better package it properly if you expect it to arrive in one piece. A study conducted by EARTH University in tiny Costa Rica indicates that they spend $188,000,000 annually on packaging materials in their banana sector alone.
During our time with Walmart we had to deal with a lot of wooden pallets. Warehouses are laid out to handle wooden pallets using steel racking for storage that stretches as high as forty feet to try to utilize the full height of the warehouse. Unfortunately, there is more space reserved for aisles than there is for actual storage. And, if more than half the space in a warehouse is reserved for aisles, then the true cost of storage in that warehouse is twice as much as it needs to be. When you consider that there is over 9 billion square feet of warehouse space currently being used in the U.S. alone with an average rental plus operating cost of $1.10 per square foot per month, you begin to realize just how much extra we consumers pay for everything we buy.
Now, let’s take wooden pallets on the road. The first problem to recognize is that you can’t double stack pallets on top of each other without crushing the merchandise underneath and you can only build pallets four or five feet tall or you risk them toppling over in transit. This means that the available cubic space of trailers is rarely fully utilized. In fact, once a delivery is made, most trucks return to their depot completely empty and it is estimated that up to 40% of all trucks on the road are travelling completely empty. If we add partial loads to the equation that figure jumps to over 63%. Add to that the demanding speeds required of e-commerce these days it becomes clear why the supply chain was compromised by the pandemic. Consumers may not realize it but they pay for all of these inefficiencies and on a scale that staggers the imagination.
The industry tries to create efficiencies around the shortcomings of the pallet but that can create more problems. Because of pallets, trucks need loading docks for forklifts to enter the truck to load or remove pallets. Loading docks are given time slots in an effort to improve efficiency and to lower costly wait times at the distribution center or at the retail store. But, if a truck misses its’ time slot, the domino effect causes bottlenecks that ripple through the entire chain and the cost of a driver and tractor trailer idling start to add up exponentially; another added cost to the products consumers buy.
The pallet is also hindering innovations in the supply chains. Our CEO is a lead expert for the International Standards Organization on the Circular Economy working with others to create an innovative circular economy and that can’t be done with the current industry standards. The supply chains provide goods through a singular supply delivery network. If we want to pick up any reverse logistics items (anything coming back up the chain like store returns, overstocks, perishable items, shelf pulls freight damage, recyclables, etc.), we use a completely separate transport network that is totally unrelated to the supply network. In other words, not circular at all. What we need to do is combine the capabilities of these two networks. If trucks are empty after their deliveries wouldn’t there be room on those trucks to pick up reverse logistics items? And, if I’m going to send out an empty truck to pick up reverse logistics items, wouldn’t it make sense to combine the empty legs of both these trips to make sure that we don’t waste any space in the supply or reverse chains? So why aren’t they doing that? Because of pallets. If you drop a pallet off you don’t have room for a returning pallet because it will continuously block pallets that need to be unloaded at the next destinations.
Solution: So, let us ask you this…
What if we could devise a system that would allow us to completely eliminate wooden pallets so all those trees that are felled each year to make those pallets could instead continue to filter our atmosphere?
And what if we could find a way to store merchandise at half the cost by eliminating all those aisles in a warehouse and then find a way to eliminate the need for loading docks completely so delivery is not hindered and trucks are not left idling, polluting the atmosphere as they wait for a loading dock to open up for them?
What if we had a system that combines the supply and reverse chains in a single trip creating the backbone to a truly Circular Economy?
What if we had an R&D platform for AI, Distributed Ledger Technology (Blockchain), Autonomous Robotics, Internet of Things, 5G Wireless Communications, Cloud/Edge Computing, etc. so we could track every item everywhere around the globe in real time with complete logging and verification of all processes?
To solve all these problems we patented a carousel type of mechanism that acts as an Automated Storage and Retrieval System like the one below using recycled aluminum platforms in place of wooden pallets and we suspend those platforms from the carousel mechanism so they can move the entire length of that carousel, forwards or backwards.
Then we encase each platform by adding sides to them to create a cubic design to better protect the contents of each.
This would allow for various designs that could be custom made for each application. The outside dimensions would be standardized to ensure it fits within the carousel mechanism but the inside could be built as a hanger for garments as an example or as a rack to support trays of smaller items where the trays are of varying depths to handle a wide variety of merchandise.
And, we put this entire carousel system inside an intermodal steel shipping container or truck trailer so it can be taken on the road.
Putting two carousels side-by-side within the container or trailer would utilize the entire available space and encase merchandise in these cubic “modules” during transport so it’s protected far better than with plastic wrap with no need for the excessive packaging we currently use to protect it.
Then stack the containers side-by-side within a warehouse to eliminate 90% of those aisles because now we can bring goods to the person instead of the person to the goods.
View our 90-second video of the system’s functionality: https://youtu.be/NufpWOhq4bI
The drawing below lays out two identical warehouses that are both drawn to scale. The image on the left is a typical layout of the racking used to store pallets within a warehouse and the ‘X’ in the top-left corner of each drawing represents pallet positions within the racking. Each layout has the exact same number of pallet positions and yet the layout on the right using the Cargo Carousel System only requires half the space to store that exact same number of pallets.
Since intermodal steel shipping containers are already weatherproof, they can be stacked on top of each other outdoors to create instant storage anywhere because the carousel mechanism brings the modules to the doors so a forklift can still access the merchandise no matter how high the containers are stacked. This means retail micro-fulfilment centers are easily established just about anywhere to store inventory much closer to the consumer.
At the retail store this carousel system has several applications and provides fulfilment options that brick and mortar retailers in the ecommerce space are desperate to find; it separates ecommerce inventory from the store’s inventory. Stacked outside behind the store it also provides instant storage to absorb seasonal fluctuations instead of leasing expensive warehouse space that goes unused in the off-season to add dramatic flexibility.
If a keypad or card reader is connected to one end of a container using this system and the other end is opened into the store, then staff can load modules from inside the store while consumers or couriers with proper authorization can retrieve their goods from the other end to provide a hands-free buy-online-pickup-in-store delivery mechanism. This same delivery system can also be modified for use with drones as that sector gets further established. Last mile delivery continues to be a challenge for retailers but this same system can also be used as a locker to provide a stand alone delivery service that offers fast replenishment capabilities by simply swapping out entire empty, spent units with newly pre-stocked units.
Our system focuses on the pallet but creates an entire solution not just a replacement of the wooden pallet. Other options exist but they don’t solve all the issues of pallets and even create other problems. Returnable Transport Packaging (RTP) is a good example of this. It’s a great idea but it has one major drawback; theft. In fact, theft is so prevalent with RTP that organized crime has gotten into the game because there is no real way to protect RTP without expensive tracking mechanisms that are hard to justify for every RTP. The cubic modules of our system are already being tracked and RTP’s can fit nicely into our system. Most are already stackable and the dimensions of many are designed to fit on wooden pallets so they’ll easily fit into our system and multiple RTP’s can be tracked at once while inside our lockable cubic modules.
A Real World Example: the Banana Value Chain
We had a study conducted by experts from EARTH University in Costa Rica that indicates the Cargo Carousel System (CCS) can achieve a cost savings of USD $188,000,000 annually by reducing the single-use packaging (cardboard boxes, plastic bags, wooden pallets, etc.) that is used in just the banana sector of Costa Rica alone. Using our Cargo Carousel System allows these same savings to be achieved in all value chains that use packaging to protect their products during transport and this system is easily scaled across geographies and supply chain sectors globally.
This makes the CCS a powerful tool across value chains with its ability to lower landed costs dramatically for downstream participants while reducing their environmental footprint. From a social perspective this system has the potential to improve the livelihoods of smallholder farmers not only with lower packaging costs but also with an ability to provide them with individual cubic modules that are better suited for their smaller production capabilities. Small farmers can pool or consolidate their modules with other small farmer’s modules creating full container loads for shipping that can help them to gain economies of scale to compete in global markets.
On the return trip (reverse logistics) the empty modules can be filled with secondary market merchandise, things like store returns, overstocks, label changes, freight damage, shelf pulls, warranty items, etc. We know how to obtain much of this merchandise for free or for pennies on the dollar and we plan to ship it back to farmers to help diversify their revenue streams as it helps to improve their livelihoods. Combining the supply and reverse chains creates the beginning of a Circular Economy.
But, before helping smallholder farmers, we have to fine tune this system in a real world setting. This has us currently developing a pilot project with AgroAmerica, one of the largest banana producers in the Western hemisphere, to develop the Cargo Carousel System and use it to ship bananas from their facilities in Central America to the retail markets of Europe and North America.
Other participants in this pilot project include Carrier Transicold, world-leading manufacturers of refrigeration systems for the transport industry, VDH Products BV, the world’s foremost experts and largest producers of ripening and storage systems for climacteric fruits and vegetables and Toyota Advanced Logistics Group who may provide engineering, production, distribution and aftermarket support services. We are in discussions with many potential participants for this project.
The versatility of our system becomes very apparent with ripening climacteric fruit (fruit that ripens after being picked). Ethylene gas is the catalyst found in nature that initiates the ripening cycle of climacterics and VDH Products have developed ripening systems that are controlled by humans to adjust the shelf life of climacterics to exacting standards so they can be perfect for retail display at the exact time required. Our goal will be to ripen climacterics while they are still inside the intermodal steel shipping container that they were transported in. This will allow us to bypass the ripening centers and distribution centers currently being used for the ripening process to further lower the landed costs of the products. Each of the companies mentioned above recognize the increased sales potential of their own systems by collaborating with us in the development of this pilot project.
The final development of the Cargo Carousel System will use the Internet of Things combined with Distributed Ledger Technology (Blockchain) to track each of the cubic modules throughout their supply chain journey. We believe that we can track each module so closely that we can eliminate modern slavery (forced labour) from supply chains. When unethical middlemen find out that we can actually monitor their actions from anywhere in the world using our proprietary cellular/satellite tracking capabilities, they will be hard pressed to continue their unethical ways.
Circular Economy: when a cubic module is removed from the CCS it creates space to put another module back on in its place. As deliveries are made, recyclables and goods to be refurbished by the manufacturers can be picked up at the same time for return to the manufacturers. This creates a cost effective starting point to a Circular Economy.
Eliminate Empty Backhauls and Partial Loads: making deliveries and pickups simultaneously means that trucks are always full so all that remains to close the circle is a circular route that ends at the depot or DC where it started from, so recyclables and goods to be refurbished can be further processed and new loads can be picked up for delivery.
Eliminate Most Aisles in a Warehouse: when stacked side-by-side in a warehouse the need for most aisles is eliminated, goods are brought to the forklift instead of the forklift going to the goods.
Eliminate the Need for Loading Docks: humans/forklifts no longer need to enter the container/trailer to access merchandise, the Carousel brings the merchandise to the doors of the container/trailer where it can be easily accessed by a forklift, so loading docks are not required which adds flexibility to bay door usage and allows cross-docking to occur out in the parking lot instead of in the warehouse.
Efficient Storage Indoors or Outdoors: weatherproof intermodal steel shipping containers can be stacked outdoors at the DC or at the retail store as high as desired while the contents can still be accessed and, because these containers are ISO certified, their 8’ height is identical, so autonomous, robotic forklifts can be easily programmed using standard GPS coordinates to identify the exact location of each cubic module instead of using overly sophisticated and expensive optical recognition programs that are unreliable and not fit for this purpose.
Full Trailer/Container Height Utilization: when pallets are stacked with merchandise higher than four of five feet they risk toppling over in transit and the plastic wrap that holds a pallet of goods together rarely helps to protect the contents but the four-foot cubic modules of the CCS allow full height utilization of the container/trailer while protecting merchandise far better and eliminating the need for most single-use packaging.
Efficient Last Mile Delivery: with one end of a steel shipping container opened into the store and a keypad or card reader at the other end’s opening, store staff can load from one end while customers, couriers or drones with the proper authorization can pick up at the other end. The same concept would work as a locker with the keypad or card reader end only; full, pre-stocked shipping containers could be efficiently exchanged for empty/spent units
An Excellent Platform for R&D Collaboration: Artificial Intelligence, Robotics, Internet of Things, Distributed Ledger Technology (Blockchain), Analytics, Information and Communications Technology, Wireless/Satellite Technology, Cloud/Edge, Physical Internet, Nextrust, etc. can all be incorporated into this system to enhance efficiency and further the research in all of these technologies.
Fits with Existing Returnable Transport Packaging (RTP) Systems: many of the RTP systems that are currently in use can be incorporated into the CCS. The base of many of these systems are often the same as pallets (1000 x 1200 mm) and will fit onto the CCS with few adjustments required including many super sacks.
Track and Trace: we use a combination of proprietary cellular and satellite communication to balance efficiency with speed providing real-time monitoring and control to remotely ripen climacteric fruit in transit, lock/unlock modules or even initiate streaming video to optimize security and all with continuous logging capabilities.
Sustainable Development Goals: we’re members of the UN’s One Planet Network providing solutions to eight of the seventeen SDGs and all within a single system.
The Cargo Carousel is a “system” that is utilized end-to-end throughout the value chain; not just in transport or storage or retail or last-mile delivery but throughout the entire chain. It transforms the value chain with a flexible and scalable system representing a complete solution that is easily installed and modular by nature so customers can quickly adopt, see immediate benefits and ROI’s, and add to their systems as their needs increase. Best of all, this system is complementary to existing operations so there is virtually no change to current infrastructure, processes or even a need to upgrade equipment or retrain employees.
Bringing the Cargo Carousel System into the greater supply chain planning process offers tremendous strategic and performance potential. By leveraging this System as a callable capability and incorporating it into downstream transportation and upstream supply chain workflows, companies can enhance distribution and retailing operations, increase supply chain collaboration, optimize inventory, accelerate velocity, improve asset utilization, have fewer empty backhauls/partial loads, reduce fuel costs along with greenhouse gas emissions, automate business processes, and increase recycling and sustainability by an order of magnitude. The simplicity of the Cargo Carousel System makes it difficult to fully grasp its ability to reduce cost while simultaneously boosting performance.