The other day, I talked to Bill Mashy, Rehrig Pacific’s general manager, about the plastic pallet market.

One of the questions I asked Mashy was whether Rehrig Pacific was involved in a plastic pallet pool, something to compete with CHEP’s model for wooden pallets. His answer was interesting. “We’re not and we’re not interested,” he told me. “But we’re watching iGPS, because if they are successful it would be a boost for the plastic pallet industry.”

That’s because a successful plastic pallet pool would theoretically create the demand for tens of millions of new plastic pallets, a product Rehrig Pacific manufactures. “We’re doing some pallet sorting for them now with our logistics business,” Mashy said. “If they can move the market, that will create an opportunity for us to manufacture more pallets. That’s where the excitement is.”

iGPS has been making news lately. The acronym stands for Intelligent Global Pooling System, and the i refers to an embedded RFID tag that allows a customer, or iGPS, to track the location of the pallets.

The model works much like CHEP’s pool of wooden pallets: Instead of buying the pallets, a shipper rents them from iGPS, delivers its product, then retrieves the pallets and returns them to iGPS. It, in turn, performs any repairs and put the pallets back into service. Like a pool of wooden pallets, the key is being able to keep track and recover the pallets in the pool. For that reason, they work best in closed loops.

While plastic is still a niche product in the overall pallet market, and iGPS has only a small percentage of the pooled pallet market, it has landed some brand name customers of late: In February, the company announced its first national account, Imperial Sugar. The company has also added Pepsico’s Quaker, Gatorade and Tropicana business units to its customer list. Just last week, General Mills announced the completion of a successful pilot along with plans to begin introducing iGPS pallets in its network in the coming months.

Besides being made from plastic, one of the characteristics that separates the iGPS pallet from others is an embedded RFID tag. Bob Moore, the company’s CEO, says SC Johnson, one of its early customers, is using the tags in a highly-automated plant in Wisconsin. “The RFID tag is used instead of a bar code to identify the pallet as it moves from the dock into and out of an automated storage and retrieval system,” says Moore.

And while a plastic pallet costs considerably more to produce than a wooden pallet, Moore says in the long run, they are cheaper to use. “We believe a plant can get a 6 to 10% productivity increase just by taking the wood out,” Moore says. Where do those increases come from? “One of the measures used by our largest customer was how many interventions, or interruptions, were caused in the plant by the failure of wooden pallets,” says Moore. “They found there were up to 45 interventions a day on average. In the 18 months that they’ve been using plastic, their interventions are running just one a week.”

Like the rookie quarterback showing up for practice for the first time, iGPS has challenged CHEP, the veteran, to a head-to-head competition to compare their respective products. “We are confident we would prevail in each and every aspect of the challenge,” says Moore.

Moore clearly is passionate about his company as he makes his case for iGPS. In the long run, I think there are questions for the market to sort out, like who pays to replace a $65 plastic pallet if its lost or stolen – a comparable wooden pallet is probably a fourth of the cost of plastic - and who is responsible for retrieving them if they show up in another pallet recycler’s yard. All of which means I don’t know whether the consistency of a molded plastic product will finally prevail over the cost-effectiveness of wood in the marketplace for pooled pallets, but like Mashy from Rehrig Pacific, I think it’s going to be interesting to watch the evolution of this new model. Follow us on Twitter. www.twitter.com/modernmhmag