Luxembourg-based RM2 International entered the U.S. newspaper supply chain in the latter part of 2014 with a rentable fiberglass composite pallet used to distribute pre-printed inserts. By far its most prominent customer in the industry is Quad/Graphics, one of the United States’ largest commercial printers, with dozens of facilities across the country that print flyers for major retailers, shipping them for insertion into daily and weekly newspapers. Quad/Graphics phased in the new pallets over the course of the last year or so, scaling back on its use of a plastic, nestable pallet by Perfect Pallets that has been in wide circulation in the market for more than 20 years.
“What’s wrong with a little good-old-fashioned competition?” one might ask. “Aren’t there enough wooden pallets still in use that there’s room in the market for two vendors of reusable pallets? There are trees to be saved, after all. And Quad/Graphics can’t be blamed for wanting to trim its operating costs with a substantially less expensive rental pallet.”
But all of that is beside-the-point to the downstream recipients of the new pallets, who argue that the product itself is poorly designed for its end use, presenting hardships and hazards that packaging and warehouse managers had not previously encountered with reusable plastic or one-time-use wooden pallets.
As the busy packaging season approaches, E&P spoke with newspaper packaging, circulation and warehouse managers and RM2 representatives to find out about the current stage of these new pallets and where the situation is heading.
Stackability and Stability
According to packaging and warehouse managers, the physical characteristics of the RM2 pallet are central to the pushback being mounted against the company. The product design more closely resembles a slatted wooden pallet than the molded plastic platform that Perfect Pallets employs to enable multiple pallets to nest together when stacked.
“(The RM2 pallets) don’t interlock with one another when you stack them high,” said Allen Johnson, mailroom supervisor at The Fayetteville (N.C.) Observer. In addition, the RM2 pallets consume more space as they accumulate on the packaging floor. A stack of 16 RM2 pallets equates to 27 nested plastic pallets from Perfect Pallets, as illustrated by Johnson in an accompanying photo.
But that’s not the real rub—at least not by itself. Because the fiberglass composite used in the manufacture of RM2 pallets has a smooth, low-friction surface, they tend to slide around on one another when stacks of them are being moved.
“The only thing that keeps them from sliding is the sheer weight of the pallet itself,” said Keith Fritz, general manager of the Reading (Pa.) Eagle Press. “It’s much heavier than the Perfect Pallet is (52 pounds vs. 36 pounds).”
Even a stationary pile of RM2 pallets in a busy packaging center is unsafe, Fritz said. “There’s a lot of activity, both in fork trucks and people on foot, and floor jacks moving skids around. The weight by itself doesn’t solve the problem that you can’t stack these RM2 skids very high without creating a real potential hazard of something bumping into them and knocking them over. You would definitely not want to be on the side of where those skids fell if they were pushed over.”
At the Watertown (N.Y.) Daily Times production facility, the impact on available space and the concern about safety are top-of-mind for circulation director Mary Sawyer.
“We store our pallets downstairs until we have someone come pick them up. We just don’t have the room to store these because I won’t allow them to be stacked,” she said. “The Perfect Pallets we can stack 25 in a stack and put them right on the fork lift without having to secure them together, and they’re not going to wiggle around. It’s very safe.” In contrast, she said, “I won’t allow (RM2 pallets) to be stacked any higher than three or four.”
Other packaging and warehouse managers reported handling stacks of as many as 10 to 17 RM2 pallets, but as a rule, all were implementing added precautions.
“I have to spend money, and shrink wrap these pallets to keep them safe,” Johnson said. “I’m just putting a couple layers of shrink wrap all the way up and down a stack of about 16 or so and then storing them in the warehouse until I have enough for the trucking company to pick up.”
The Observer has an automatic shrink-wrap machine to minimize the work involved, but he acknowledged that there are labor and material costs he is expending on RM2 pallets that he doesn’t have to spend in the handling of nested Perfect Pallets.
Objections to RM2’s Business Model
The cost and imposition of having to shrink-wrap or band RM2 pallets for handling and eventual return is a sticking point for managers pushing back against what they claim was RM2’s initial business model. The company and its carriers reportedly had certain expectations of the newspaper end-users that Fritz and others considered presumptuous.
A short time after the new skids showed up in the supply chain and started accumulating, Fritz reported, he got a call from RM2 and was surprised by the return requirements he said were dictated to him.
“They wanted me to call a trucking company (and) have these skids picked up. I would have to put them in a certain number of skids high; and I would have to shrink wrap them; and I would have to load the truck. They also wanted them banded,” he said. He was expecting after that to be offered “x number of dollars” to do this, but he was incredulous to learn that they were expected to absorb that cost.
RM2 was making a profit, and Quad/Graphics was saving money, but in so doing, both were pushing expense and nuisance downstream to newspaper end users, Fritz reasoned.
“I had no agreement with anyone that I would indeed collect and ship the pallets (for return)…nor did I sign any paperwork that made me part of the grand plan,” he said.
Recognizing no obligation on his part or the part of his paper to comply, he adopted a stance that raised some eyebrows among his peers and presumably commanded some attention at RM2 and Quad/Graphics.
“I indicated we would take (Quad/Graphics’ printed) products in, just as we do with any other supplier of inserts,” he said, “and in doing so, we would treat the vessel they arrived on as we would treat any (wooden) skids. We would dispose of them.”
Sawyer was less inclined to adopt a posture of brinksmanship with RM2, but agreed with her peers that she was not obliged to expend resources to house them inside or prepare them for return transport.
“If you get right into the ethics of it,” she said, “I would never intentionally throw them away, but the proper care of them is not my responsibility.” She called the instability of stacked RM2 pallets a “design defect,” and said her paper is “unable to stack them in a reasonable area inside.” So she leaves them unsecured on her dock and RM2 has arranged for an independent contractor to pick them up within a few days notice, after a quantity of them have accumulated, she said. They are not shrink-wrapped or banded by her crew.
RM2 executive vice president Richard San-Martin, responding in a written statement to E&P queries, reported that, “No banding or shrink wrapping is required or had been required as part of our service offer.”
But according to the managers I spoke with, his comment is not consistent with what is reportedly happening in general practice. Multiple end users said company representatives and carriers were imposing those restrictions for returns to be accepted. In a follow-up statement, San-Martin pledged to “Act upon any issue raised directly to see how we can ensure continuity of service and improve customer expectations.”
RM2’s solution to the issue of slippery skids and the resulting instability of stacked RM2 pallets, according to San-Martin, is to coat them with a different surface.
“New pallets with a substantially higher coefficient of friction are in the process of being introduced,” he said, specifying that the new coating would be applied to “all new pallets.”
He offered no remedy to the inventory of RM2 pallets that are already in circulation, but maintained the RM2 pallet that was originally introduced with “a powder coating” meets “all appropriate (ISO & ANSI) standards” and “has proved satisfactory in almost all environments in which it has been used or tested,” including independent testing at the Virginia Tech Center for Packaging and Unit Load Design.
According to Jon Healy, receiving team lead for the Chicago Tribune, the next generation of RM2 pallets were recently tested in his facility with favorable results. He said RM2 had added a “glossy coat” to the top and bottom surfaces of the pallet, which “has made the pallets much tackier when they’re on the forklift and when you have empty RM2 pallets stacked upon one another.”
He acknowledged that this development will not have an immediate impact on the existing supply chain. He agreed the earlier RM2 pallets, which present ongoing safety challenges, “could be out there for years.”
Addressing the impact of RM2 pallets accumulating in cramped newspaper production facilities, San-Martin acknowledged that a “nestable pallet has a better stacking ration than a block pallet (like RM2’s),” but that, too, has a fix.
“Different procedures do need to be implemented as receivers switch from a nestable pallet to an RM2 (pallet),” he said. “And RM2 is seeking to train and facilitate the transition for the receivers.”
Fritz said that subsequent to disposing of a significant quantity of RM2 pallets, he was engaged by RM2 and Quad/Graphics in a conference call to work out a resolution. “I don’t know if Quad/Graphics applied pressure to RM2 because of the complaints they were receiving, or there was mounting pressure on RM2 and their investors about the problems in the field, but they seem to have at least an understanding there are some real-life problems with their business model in the collection process, and felt the push back.”
Claire Ho, director of corporate communications at Quad/Graphics, said in an email, “We are committed to sourcing the most reliable products in the industry at the best value for our clients. We give priority to delivering printed materials in the safest manner possible for arrival in the best condition possible. Additionally, we favor reusable pallets for their environmentally sustainable benefits.”
Fritz, meanwhile, has adopted a wait-and-see posture. “I will, for the time being, suspend disposal of the pallets and will do so unless the steps RM2 has taken don’t work and it becomes an expense in dealing with them.”
The strategies different papers are adopting in dealing with persisting problems are varied. Myers had leverage that many other papers didn’t since the Dispatch outsources the printing of its comics to King Features syndicate, and King prints at Quad/Graphics. He indicated that some back-door diplomacy had been sought that he hoped would return results. Failing that, he said his paper’s next step is to start approaching insert advertisers who print at Quad/Graphics to enlist some support pressuring the printer for change.
Others, though not particularly happy about the new pallets, have resigned themselves to new realities and are making internal adaptations.
“Considering it looks like these pallets are not going to go away, we do the best we can do,” said Osvaldo Agosto, supervisor of pre-stage logistics for Tribune Direct, a subsidiary of the Chicago Tribune.
Agosto was the initial poster on a postpress users group forum, raising the question about how other papers viewed these pallets, and he was surprised by the overwhelming response. “I didn’t know there were so many papers out there that felt the same way I did about it. I didn’t put it out there to bash any one particular product… (but) I feel like I did something good to get things going. I’m just hoping it can be fixed so it’ll work out for everybody.”
W. Eric Schult is a retired, 35-year veteran of the newspaper business. He most recently served as senior operations and technology executive at The Fayetteville (N.C.) Observer. Contact him on LinkedIn.com.