As a pallet buyer, you can choose to work with a pallet manufacturer or a pallet broker. Below, we explain these two basic models and why they are crucial for a pallet buyer to understand. Once armed with a basic grasp of the nuances, you can help ensure you get the best value for your procurement dollar. So, let’s start with the foundation – what sets apart a pallet broker from a pallet manufacturer?
What Is a Pallet Manufacturer?
A pallet manufacturer, sometimes called an asset-based pallet supplier, is an operation that produces pallets from raw material. The pallet manufacturer sells pallets directly to end users, as well as to brokers, which we expand upon in the next section.
While wood pallets account for over 90% of the U.S. market, some niche pallet manufacturers specialize in other materials such as plastic, corrugated paper, and presswood. Wood pallet manufacturers may also remanufacture pallets from recovered pallet components or combo pallets made from a combination of new and recovered pallet parts.
Leading wood pallet manufacturers often feature production equipment such as high-speed automated pallet nailing systems. Many custom pallets can be machine nailed, while others, depending on order size or complexity, are assembled using pneumatic hand nail guns. To varying degrees, many pallet manufacturers also produce the pallet components they need for manufacturing, in addition to purchasing ready-to-use wood pallet components, known in the trade as cut stock.
What Is a Pallet Broker?
A pallet broker is an intermediary who sources pallets from pallet manufacturers and pallet recyclers and resells them to customers. A “pure” pallet broker, sometimes referred to as a non-asset-based pallet supplier, does not produce pallets itself. Pallet brokers provide procurement services for pallet buyers, as well as 3rd party sales for pallet manufacturers.
Wood pallet brokers typically do not stock pallets. They arrange for shipment directly from the pallet manufacturer to the pallet customer. Brokers, sometimes called stocking distributors, more commonly hold an inventory of resale-ready pallets in the plastic pallet market.
Broker sales relationships may be transactional or may involve deeper partnering. Brokers can act as a de facto sales department for some pallet manufacturers, and as the de facto pallet purchasing manager for particular companies.
Pallet brokers typically work with an established network of pallet manufacturers and recyclers across the country to meet their clients’ needs. While pallet manufacturers, at least until recent years, have most often been local or had a handful of locations within a region, pallet brokers have been especially valuable in servicing multi-plant or national accounts.
What Are the Basic Strengths of Pallet Manufacturers vs. Pallet Brokers
In this section, we list the strengths of both pallet brokers and single-site pallet manufacturers – from the customer perspective. Please keep in mind, however, that pallet industry consolidation is well underway, and many leading pallet manufacturers, like PalletOne, increasingly have multiple locations.
Pallet Broker Strengths
- National coverage. Leveraging networks of one hundred or more pallet manufacturers and recyclers across the country, pallet brokers excel in meeting pallet requirements of multi-location operations spread across the country.
- Competitive pricing: The broker is not tied into a single supplier relationship and can shop your pallet business to various manufacturers in search of the best deal.
- Contingency sourcing: While an extreme weather event or a plant fire might take a single pallet manufacturing plant out of operation, a pallet broker can move orders to other pallet producers to help minimize any disruption to the pallet buyer.
- Eliminate complexity and save time for the pallet buyer: They eliminate the headache for pallet buyers of negotiating separate contracts for each of their plants and understanding the nuances of various regional pallet markets.
Pallet Manufacturer Strengths (Single Location)
- No middleman or intermediary: Because pallets are sold factory-direct, there is no profit margin tacked on by a pallet broker.
- Consistent customer service: Dealing with a dependable local manufacturer enables a comprehensive relationship to develop, benefiting both parties. Rather than a transactional relationship, the pallet manufacturer develops a deeper understanding of exactly what the customer is looking for, not only in pallet specification but also regarding service nuances such as delivery equipment, stack height, banding, time of day, site traffic safety rules, etc.
- Just-in-time capabilities: In many cases, your local pallet manufacturer may hold “ready to go” inventory for its regular customers, which can be invaluable, particularly if your specification calls for a custom product. At a minimum, the local manufacturer will have material on hand and established material-specific supply connections to quickly build orders, while other manufacturers unfamiliar with your product may take longer to fill an order if they do not have the necessary material on hand.
- Supporting local business: Buying from your local pallet manufacturer helps support the community, generating local jobs and economic activity.
Pallet Brokers and Pallet Manufacturers: How Today’s Industry Is Transforming
While the discussion above considered pallet brokers and pallet manufacturers as two separate business models, things are more complex in the real world. Companies may do both, to varying degrees.
For example, a local customer establishing a plant in another city might ask if their pallet manufacturer if it can supply the needed pallets. While the opportunity might not be substantial enough to warrant investing in a new location, the pallet supplier may reach out to a similarly minded pallet operation and establish a brokering arrangement.
The brokering aspect may remain a modest part of the business. However, in a few notable cases, large brokering entities have evolved, tracing their roots back to an initial manufacturing operation. It can depend on the vision of the supplier. Some have been rooted in manufacturing excellence and community involvement, while others have focused on sales growth.
More recently, industry consolidation efforts have seen considerable merger and acquisition activity, with some large entities now featuring asset—and non-asset-based business units. In the unique case of PalletOne, the consolidation strategy has resulted in an unparalleled nationwide network of pallet manufacturing plants. Let’s take a closer look at how PalletOne bridges the best of both models.
1. Supply Chain Security
Disruptions are becoming increasingly frequent. From extreme weather to plant fires, unplanned events can leave local producers struggling to deliver. PalletOne, on the other hand, leverages its coast-to-coast presence to shift materials where they’re needed most.
2. Simplified Procurement
Managing multiple pallet suppliers adds complexity, but with PalletOne’s single-point-of-contact service, you get one reliable partner for all your pallet and industrial packaging needs. PalletOne’s Pallet Concierge service eliminates headaches so you can focus on running your business, not managing suppliers.
3. Consistent Quality, Backed by Industry Leadership
Not all pallets are created equal. As the largest pallet manufacturer in the U.S. and a division of UFP Packaging, PalletOne delivers uniform, high-quality pallets supported by a national quality assurance program and advanced testing capabilities at UFP’s packaging laboratory. With ongoing investments in technology, advanced automation, and workforce training, PalletOne ensures reliable and optimized pallet solutions designed to fit your use case.
4. Nationwide Reach, Local Service
With locations across the country, PalletOne combines the benefits of working with a local pallet manufacturer and a national network. It offers personalized service and local familiarity combined with the robust resources and resilience of a nationwide provider. This means faster deliveries and a responsive team that understands both your local market and national logistics needs.
With PalletOne’s deep resources, national footprint, and unwavering commitment to quality, you can have the best of both worlds. Let’s talk about how we can optimize your pallet strategy and strengthen your supply chain for the long haul. Contact PalletOne’s national sales team to find out more.
