New pallet regulations will add cost, maybe confusion
New pallet regulations will add cost, maybe confusion
As of Sept. 16, all wood packaging materials, including pallets, crates and boxes, must be treated for pests before entering or leaving the United States.
The required heat or fumigation treatment is expected to add about $1 to the cost of a pallet, and there is some question as to whether the produce industry will be ready to implement this new regulation handed down by the USDA's Animal & Plant Health Inspection Service.
"I think it is a sleeping giant," said Jim Gorny, vice president of technology and regulatory affairs for the International Fresh-cut Produce Association. "I am not sure people are aware of this. It was brought to my attention by a member who is worried about it.
Lee Frankel of the Fresh Produce Association of the Americas in Nogales, AZ, said, "I am concerned that once the regulation goes into effect, we won't have enough pallets. I have not seen many pallets with the stamp on it. I'm not sure [the pallet manufacturers] will be able to ramp up in time.
But Tim Debus of the International Banana Association said that industry is ready for the regulation. He said that the banana industry is concentrated in but a few hands, so getting the word out and assuring compliance was not a difficult task. Each of the major banana companies is working with its pallet suppliers, and they do seem to have the situation under control.
Per Ohstrom, director of marketing for pallet manufacturer Chep, said that the pallet industry is also well aware of the regulation. "All of our customers know it's coming and are ready for it, he said.
Also confident of the pallet industry's ability to comply with this regulation is Bruce Scholnick, president of the National Wooden Pallet & Container Association. He said that while the ultimate end-users in most industries -- from high tech to produce -- do not appear to be very familiar with this new regulation, the pallet manufacturers are ready. "I can assure you that your pallet supplier knows about this and is ready to comply.
Mr. Scholnick added that the cost of compliance will add about $1 to the price of a pallet. With current pallet prices ranging from about $4 to $8 depending upon the specs and whether it is a new or used pallet, that will be a price increase of about 12-25 percent.
Though it is seemingly a new regulation, the pallet association executive said that it has been in the works for more than a half-dozen years and all it does is bring the United States into compliance with international standards.
Mr. Scholnick explained that since the late 1990s, the international community involved in plant protection has been working on this issue.
As background, it is generally conceded that untreated wood is a potential host for damaging pests. The United States is particularly fearful of the importation of the Asian long-horned beetle hitchhiking into the country on wooden pallets.
Other countries are concerned about the pine wood nematode coming to their country from the United States.
We have many natural predators for the pine wood nematode, so it is not a problem in the U.S., said Mr. Scholnick. "But it could be a big problem in other countries that don't have the pest nor any natural predators.
At the International Plant Protection Convention in March 2002, the interim commission on phytosanitary measure adopted an international standard entitled Guidelines for Regulating Wood Packaging Material in International Trade. The standard calls for wood packaging material to be either heat treated or fumigated with methyl bromide in accordance with the guidelines, and labeled with an approved international mark certifying treatment. About 130 countries signed the IPPC treaty, and implementation has begun in many of those countries.
In fact, the European Union adopted the new standards on March 1. Theoretically, any shipment of U.S. produce exported to Europe since then has had to include treated and certified wood packaging and pallets, according to Mr. Scholnick.
However, he also said that most countries are allowing a grace period of up to one year. He expects APHIS to be equally lenient for a period of time after Sept. 16. However, a senior import specialist for APHIS said that the guidelines will be strictly enforced come Sept. 16. The rule was initially published on Sept. 16, 2004, so APHIS' William Aley said that the industry is technically in the grace period right now. "I can't speak for Mexico. All I can tell you is what I have been told and Mexico says they are ready.
In fact, Mr. Aley said that the Sept. 16 implementation date is Mexican Independence Day, and picking that day had special significance for that country.
Mr. Aley said that as of Sept. 16, pallets that are not stamped with the official treatment certification will be turned away. In addition, he said that packaging made of wood will also be turned away. While there was an exemption in the original rule for specific fruit boxes with a minimum amount of wood, the APHIS spokesperson said that the exemption is currently being re-examined. "Morocco raised the bar for all of us, he said. "The fruit box exemption was designed to allow less-developed countries to continue exporting. Morocco is now stamping its tiny boxes that it ships clementines in. That's only a half-inch of wood and they are stamping it. The world is saying, 'If Morocco can do it, anybody can." Mr. Scholnick said that it is important that suppliers of produce make sure their pallet suppliers know the regulation and are moving toward compliance.
Mr. Ohstrom said Chep Mexico is in the process of bringing its pallets that are shipped to the United States into compliance. Most of Chep USA's pallets are for domestic shipments only, but he said that those headed for Mexico will be compliant. The company has established a new product that complies with the requirements.
The regulation allows for the raw lumber to be treated and stamped or for the pallet itself to be treated. Whatever method a company uses must be approved by a certified inspection service, and most importantly, the pallet or lumber has to be stamped.
Mr. Scholnick's organization has been picked by APHIS to manage the program as it relates to the treatment of pallets while the American Lumber Standards Committee is managing the treatment of the raw wood. Currently there are 14 companies licensed to inspect for the heat treatment, while there are four certified fumigation inspection services. The heat treatment consists of heating the core temperature of the wood to 56 degrees centigrade for a minimum of 30 minutes. The fumigation process involves methyl bromide. Though methyl bromide is being phased out, Mr. Scholnick said that there is an exemption for use on quarantine pests and Third World countries are also on a slower phaseout schedule, so he expects this method will be used fairly regularly.
He said that because methyl bromide is not a good penetrator of wood, it cannot be used to fumigate a large stack of wood, so most of the raw lumber is heat treated, while the fumigation process is used most often when treating the finished pallet product. But many pallet manufacturers have also built heat treatment facilities at their manufacturing plants.
Because of the cost of heat treating and fumigating, the pallet association expert said that many firms will segregate their pallets and only treat those headed for export. As a practical matter, he said that might not work for many produce suppliers, who may not know when they are packing the cartons and palletizing them, where that load is headed.
"It may well be that eventually only treated pallets are used because it may not be cost-effective to segregate them, he opined.
Mr. Scholnick admitted that since the the guidelines were established in 2002, there has been much confusion in the international marketplace. He said that some countries have different regulations regarding different types of wood, and the use of bark material in the manufacturing of the wood is apparently an issue. But he believes the confusion is starting to sort itself out, and there will truly be only one global standard within a year or two.
While Mr. Frankel of FPAA has not seen the activity in Mexico that gives him confidence that compliance can be achieved in a matter of months, Mr. Aley reiterated that Mexico does appear to be ready.
While Canada is a signatory of the IPPC treaty, the United States and Canada have a bi-lateral agreement that suspends the regulation for shipments between those two countries. Mr. Aley explained that the two countries share a forested border, so they also share common wood-borne pests.
Details regarding these new USDA APHIS regulatory requirements may be found at: www.aphis.usda.gov/ppq/swp/import.html.
The required heat or fumigation treatment is expected to add about $1 to the cost of a pallet, and there is some question as to whether the produce industry will be ready to implement this new regulation handed down by the USDA's Animal & Plant Health Inspection Service.
"I think it is a sleeping giant," said Jim Gorny, vice president of technology and regulatory affairs for the International Fresh-cut Produce Association. "I am not sure people are aware of this. It was brought to my attention by a member who is worried about it.
Lee Frankel of the Fresh Produce Association of the Americas in Nogales, AZ, said, "I am concerned that once the regulation goes into effect, we won't have enough pallets. I have not seen many pallets with the stamp on it. I'm not sure [the pallet manufacturers] will be able to ramp up in time.
But Tim Debus of the International Banana Association said that industry is ready for the regulation. He said that the banana industry is concentrated in but a few hands, so getting the word out and assuring compliance was not a difficult task. Each of the major banana companies is working with its pallet suppliers, and they do seem to have the situation under control.
Per Ohstrom, director of marketing for pallet manufacturer Chep, said that the pallet industry is also well aware of the regulation. "All of our customers know it's coming and are ready for it, he said.
Also confident of the pallet industry's ability to comply with this regulation is Bruce Scholnick, president of the National Wooden Pallet & Container Association. He said that while the ultimate end-users in most industries -- from high tech to produce -- do not appear to be very familiar with this new regulation, the pallet manufacturers are ready. "I can assure you that your pallet supplier knows about this and is ready to comply.
Mr. Scholnick added that the cost of compliance will add about $1 to the price of a pallet. With current pallet prices ranging from about $4 to $8 depending upon the specs and whether it is a new or used pallet, that will be a price increase of about 12-25 percent.
Though it is seemingly a new regulation, the pallet association executive said that it has been in the works for more than a half-dozen years and all it does is bring the United States into compliance with international standards.
Mr. Scholnick explained that since the late 1990s, the international community involved in plant protection has been working on this issue.
As background, it is generally conceded that untreated wood is a potential host for damaging pests. The United States is particularly fearful of the importation of the Asian long-horned beetle hitchhiking into the country on wooden pallets.
Other countries are concerned about the pine wood nematode coming to their country from the United States.
We have many natural predators for the pine wood nematode, so it is not a problem in the U.S., said Mr. Scholnick. "But it could be a big problem in other countries that don't have the pest nor any natural predators.
At the International Plant Protection Convention in March 2002, the interim commission on phytosanitary measure adopted an international standard entitled Guidelines for Regulating Wood Packaging Material in International Trade. The standard calls for wood packaging material to be either heat treated or fumigated with methyl bromide in accordance with the guidelines, and labeled with an approved international mark certifying treatment. About 130 countries signed the IPPC treaty, and implementation has begun in many of those countries.
In fact, the European Union adopted the new standards on March 1. Theoretically, any shipment of U.S. produce exported to Europe since then has had to include treated and certified wood packaging and pallets, according to Mr. Scholnick.
However, he also said that most countries are allowing a grace period of up to one year. He expects APHIS to be equally lenient for a period of time after Sept. 16. However, a senior import specialist for APHIS said that the guidelines will be strictly enforced come Sept. 16. The rule was initially published on Sept. 16, 2004, so APHIS' William Aley said that the industry is technically in the grace period right now. "I can't speak for Mexico. All I can tell you is what I have been told and Mexico says they are ready.
In fact, Mr. Aley said that the Sept. 16 implementation date is Mexican Independence Day, and picking that day had special significance for that country.
Mr. Aley said that as of Sept. 16, pallets that are not stamped with the official treatment certification will be turned away. In addition, he said that packaging made of wood will also be turned away. While there was an exemption in the original rule for specific fruit boxes with a minimum amount of wood, the APHIS spokesperson said that the exemption is currently being re-examined. "Morocco raised the bar for all of us, he said. "The fruit box exemption was designed to allow less-developed countries to continue exporting. Morocco is now stamping its tiny boxes that it ships clementines in. That's only a half-inch of wood and they are stamping it. The world is saying, 'If Morocco can do it, anybody can." Mr. Scholnick said that it is important that suppliers of produce make sure their pallet suppliers know the regulation and are moving toward compliance.
Mr. Ohstrom said Chep Mexico is in the process of bringing its pallets that are shipped to the United States into compliance. Most of Chep USA's pallets are for domestic shipments only, but he said that those headed for Mexico will be compliant. The company has established a new product that complies with the requirements.
The regulation allows for the raw lumber to be treated and stamped or for the pallet itself to be treated. Whatever method a company uses must be approved by a certified inspection service, and most importantly, the pallet or lumber has to be stamped.
Mr. Scholnick's organization has been picked by APHIS to manage the program as it relates to the treatment of pallets while the American Lumber Standards Committee is managing the treatment of the raw wood. Currently there are 14 companies licensed to inspect for the heat treatment, while there are four certified fumigation inspection services. The heat treatment consists of heating the core temperature of the wood to 56 degrees centigrade for a minimum of 30 minutes. The fumigation process involves methyl bromide. Though methyl bromide is being phased out, Mr. Scholnick said that there is an exemption for use on quarantine pests and Third World countries are also on a slower phaseout schedule, so he expects this method will be used fairly regularly.
He said that because methyl bromide is not a good penetrator of wood, it cannot be used to fumigate a large stack of wood, so most of the raw lumber is heat treated, while the fumigation process is used most often when treating the finished pallet product. But many pallet manufacturers have also built heat treatment facilities at their manufacturing plants.
Because of the cost of heat treating and fumigating, the pallet association expert said that many firms will segregate their pallets and only treat those headed for export. As a practical matter, he said that might not work for many produce suppliers, who may not know when they are packing the cartons and palletizing them, where that load is headed.
"It may well be that eventually only treated pallets are used because it may not be cost-effective to segregate them, he opined.
Mr. Scholnick admitted that since the the guidelines were established in 2002, there has been much confusion in the international marketplace. He said that some countries have different regulations regarding different types of wood, and the use of bark material in the manufacturing of the wood is apparently an issue. But he believes the confusion is starting to sort itself out, and there will truly be only one global standard within a year or two.
While Mr. Frankel of FPAA has not seen the activity in Mexico that gives him confidence that compliance can be achieved in a matter of months, Mr. Aley reiterated that Mexico does appear to be ready.
While Canada is a signatory of the IPPC treaty, the United States and Canada have a bi-lateral agreement that suspends the regulation for shipments between those two countries. Mr. Aley explained that the two countries share a forested border, so they also share common wood-borne pests.
Details regarding these new USDA APHIS regulatory requirements may be found at: www.aphis.usda.gov/ppq/swp/import.html.
