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Ikea Expects 10% Transport Savings from Pallet Replacement

Ikea will replace all 10 million of its wooden pallets with lighter, cheaper corrugated cardboard by next month, in a move the company says will cut transportation costs by 10 percent, or 140 million euros ($189 million) a year.

The company says the new pallets can support the same load as traditional timber pallets, but are just one-third the height, at two inches high, BusinessWeek reports. This means Ikea can fit more goods into each shipment. The cardboard pallets are also only 5.5 pounds, 90 percent lighter than their predecessor.

Most of Ikea’s 1,200 suppliers will assemble the pallets on site, and each pallet will be used once before it is recycled. The company expects to spend €90 million a year on the cardboard and on new forklifts designed to handle their thinner profile.

According to Modern Materials Handling, pallets made from wood by-products are about 60 percent lighter than their conventional hardwood cousins, reducing fuel consumption, and also keep millions of pounds of scrap wood from going to landfills.

Many companies rent pallets from the management companies that make and transport them. A spokesman from Brambles, the leader in that industry, said paper pallets can’t handle heavy loads or extreme weather.

But Ikea disagreed that these issues pose risks for its plan, saying its pallets are just as durable as wooden ones, and that it rarely leaves pallets sitting out in inclement weather.

In the past, Ikea has also used Optiledge plastic pallets, which reduce weight and are reusable. Similarly, Air France-KLM next year plans to roll out pallets made of a composite called Herculight, for all 120 of its cargo planes. The airline says these pallets are 35 percent lighter than its current aluminum models.

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