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In the Loop

But now a former pallet manufacturer is proposing a deposit scheme that will see specially-made pallets returned for reuse several times – saving money, reducing waste and cutting carbon emissions. David Taylor reports

This article was first published in the May 2022 issue of The Construction Index Magazine. Sign up online

Given the current shortages, any delivery of building materials is a welcome sight. And if the ambitions of Paul Lewis come to fruition, future deliveries of materials will become not only more efficient but also greener – literally.

Lewis is the man behind a new pallet recycling scheme for the UK construction industry. Called Pallet Loop, the scheme operates on a deposit basis – you pay money to use the pallet and then get that money back when you return it. Currently pallets are regarded as essentially single-use products and are often chucked into skips or even burnt after use.

According to Lewis, around 18 million pallets are manufactured for construction use every year and, of these, fewer than 10% are reused. He says that the remainder contribute up to 10% of all construction waste.

The idea for Pallet Loop came about after Lewis and his brother Ryan sold their family business, leading pallet-maker HLC Wood Products, to rival firm Scott Group in 2015.

At the age of just 34, Lewis was not ready to retire: “You can only play so much golf; I had too much time on my hands,” he says. So he started developing the pallet-deposit idea and proposed launching it in joint venture with Scott.

There has been a pallet reuse scheme operating in the UK for many years already. Originated in Australia, the CHEP scheme operates on a rental basis: the user never owns the pallet and must either return it after use or pay a penalty. You can always spot a CHEP pallet because they are all bright blue.

But you won’t see a CHEP pallet on a construction site unless it’s one that has gone astray. CHEP only operates in the retail sector where pallet specifications are more standardised than in construction. CHEP also doesn’t want its pallets getting contaminated by construction materials such as paint or cement.

CHEP pallets achieve about 98% of reuse – so the system works. But Lewis’ idea is different. “CHEP is a rental system; you place your order for pallets and pay your rental fee. But you’ll be charged an additional amount for every lost pallet.”

By contrast, when a supplier delivers goods on a Pallet Loop pallet, the customer pays their supplier the pallet deposit. As pallets move through the supply chain, the deposit passes from manufacturer to merchant to end user. After being stacked and stored, Pallet Loop collects them and returns deposits. It then repairs them as necessary and recirculates them.

“The whole thing about Pallet Loop is that we’re looking for simplicity – the risk sits with the pallet, not with the user,” explains Lewis.

Like CHEP, the Pallet Loop system uses purpose-made pallets, which it dyes bright green (instead of the CHEP blue) to distinguish them from other pallets.

Lewis says that reusing pallets shouldn’t be considered a radical idea – it should be the obvious thing to do. After all, pallets do cost money and it makes no sense to use them once and then throw them away. “Pallet waste is expensive and inconvenient,” he says. “If you’ve got 100 pallets stacked up in your yard, that equates to £2,000 just sitting there, getting in the way.”

“You should be looking at getting 12-15 uses out of each pallet.”

In fact, charging a deposit on each pallet is not even a new idea. Lewis points out that many manufacturers already do it; the problem is that there’s no standardisation – you can’t send a Tarmac pallet back to Hanson, for example. Consequently a lot of customers end up forfeiting their deposits and accepting that as part of the cost.

The Pallet Loop system will offer a range of pallet sizes, all built using FSC-certified wood from sustainable sources and built to exacting standards of durability. Lewis has even had his designs performance-tested by scientists at Virgina Tech in the US (no UK-based laboratory wanted to undertake the research, says Lewis).

All Pallet Loop pallets are ‘single-entry’ designs, with solid timber bearers spanning front to back for superior strength; and all will attract the same deposit, irrespective of size.

According to Lewis there are currently as many as 2,500 pallet specifications in the construction market. “Manufacturers aren’t pallet recovery experts and they all have their own pallet specification. You can’t have 2,500 deposit schemes operating at once – it would be a nightmare,” he says.

However, if the supply chain buys into a single pallet deposit scheme, the entire logistics system is simplified and you save money as well conserving timber resources and reducing carbon emissions.

And that is the biggest challenge for Pallet Loop. “I walk into a meeting with stakeholders and they’re all very enthusiastic – it’s a no-brainer, they say. But afterwards, people start worrying that if they sign up their rivals might not. That’s why we launched the Pallet Loop Charter.”

This is an initiative designed to allow potential users to register their approval of Pallet Loop and intention to adopt it – without actually taking the plunge. “It basically says ‘we are open to supply-chain discussions’,” explains Lewis.

Since its launch last year, several companies have signed the charter and signalled their support. They include tier-one contractors Bam Construction, Morgan Sindall and Willmott Dixon, drylining specialists BDL/Careys and Platt & Reilly, builders’ merchants MKM and Bradfords and FIS (the Finishes & Interiors Sector trade association).

More companies, including materials manufacturers Marshalls and Tobermore, contractor Sisk, house-builder Countryside, and builders’ merchant Wolseley Group signed up in February this year.

Back in October 2021 Pallet Loop conducted a trial of the service with a number of principal contractors including Bam, whose head of procurement, Dan Billinge, said: “The critical success factor here is the collaboration of the whole supply chain. Over 95% of the pallets coming onto our sites are for materials purchased by a subcontractor and we need them to be on board as well as the suppliers and manufacturers so it’s a ‘call of action’ from us to them.”

Lewis is keen to get buy-in from leading manufacturers to help promote Pallet Loop through the supply chain. Under the auspices of the Builders Merchants Federation, Pallet Loop has been presenting its deposit scheme to key suppliers: “We recently had Hanson, Cemex, Tarmac, Aggregate Industries and Breedon all together in the same room talking about sustainability,” says Lewis.

“Now we’re starting trials sending our pallets to all the bagged cement suppliers in the UK.”

In December 2022 materials manufacturer Saint-Gobain and leading merchant Travis Perkins are set to launch a trial partnership of the Pallet Loop system: “They’re aiming to be 70% Pallet Loop by January 2023,” says Lewis.

As Bam’s Dan Billinge points out, the system needs widespread buy-in if it is going to work. Lewis is more specific: “We need a critical mass of about two million pallets to properly get going,” he says.

He agrees that some users might baulk when asked to pay a deposit for a pallet, but he doubts there will be significant resistance. “We are creatures of habit,” he says. “Some people might wonder why they’re being asked to pay for something that used to come for free. But look at supermarket carrier bags – people soon got used to paying 10p. People can quickly change their habits if there’s the right incentive.”

This article was first published in the May 2022 issue of The Construction Index Magazine. Sign up online

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