AMERICAN PALLET LEASING
COMPETITION We believe that the wood pallet industry is very fragmented, consisting of over approximately 3,700 small manufacturers. We believe that our only competition in the wood pallet industry is Commonwealth Handling Equipment Pooling which operates in over 30 countries, controlling approximately 150 million pallets and 30 million containers. Further, we are aware of several metal pallet manufacturers that are, or potentially could be, our competition. These metal pallet manufacturers have longer operating histories, greater name recognition and significantly greater financial resources.
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PALLET MANAGEMENT & LOGISTICS SERVICES We are engaged in reducing product distribution costs for manufacturers and distributors by providing value-added transport packaging products and logistical services. Our transport packaging services focus on reducing customer distribution costs and include pallet retrieval, repair, reverse distribution, tracking, logistics and value-added information services.
Acquiring wood pallet manufacturers and distributors combined with our pallet management and logistics services are intended to allow us to create credibility, reliability, consistency and performance, and perform ongoing "in house" assessments in order to determine the optimal allocation of both wood and steel pallets. Through these efforts, we hope to create a vertically integrated company that offers a seamless and efficient conduit for renting steel pallets and selling wood pallets.
We intend to develop and provide an Internet-based service to our corporate customers that will provide a logistics and information system that manages the flow of shipping platforms (steel pallets with embedded satellite positioning chips) throughout the industrial supply chain within specific geographic regions in the U.S. centered around our logistics hubs. We intend to create a closed loop delivery, recovery and recycling system, which will enable us to effectively rent our steel pallets to customers and provide logistics services and information simultaneously, thereby reducing their costs, improving inventory tracking and control, reducing waste and enhancing just in time delivery.
Our proposed pallet management and logistics services are intended to enable the customer to reduce overhead and we will assume total responsibility for the ownership (steel pallets only), management and control of a customer's pallets (wood and steel). We intend to further reduce labor and supply chain costs and ensure seamless integration of pallets into the customer's supply chain by: (a) on-site management of all pallets, including the inspection and sorting of pallets; (b) inventory management and ordering of all pallets; and (c) improved asset control and tracking, either through on-site APL personnel or a dedicated IT connection.
Pallet Management and Logistics Services The Closed Loop System:
In order to facilitate a working leasing system a process is needed to be created that would allow the delivery and recovery of pallets; this is what we call our "closed loop system". This system functions when an order is received, a delivery date is entered and a truck is booked for delivery. The pallets are picked up from either a manufacturing facility or a depot and delivered to the customer. As part of entering into an agreement with us, the customer agrees to hold the used pallets at its facility to be picked up once a full load has been collected, unless there are several customers within a certain radius, then once a full load has been collected among a group of customers, a truck will pick up the used pallets to be returned to a depot (size of radius depends on location of customer, size of city/cities that the customer is located by or in and number of other customers within the radius). Pallets are collected and stored in a predictable manner, which allows us to coordinate the delivery of its pallets to its customers with the pickup of its used pallets.
The Pallets will be manufactured at our manufacturing facilities, and collected by standard recycling practices.
Tracking the Pallets:
The pallets are tracked through several methods including: 1) standard inventory management where a customer is given x number of pallets that are transported to preset destinations. The customer must return or account for x number of pallets by a certain date determined by its normal inventory turn around period agreed upon when a contract is signed; 2) radio frequency identification tags
("RFID"), which track pallets as they enter and leave our facilities; and 3)
satellite tracking chip is used only if an order is large enough to warrant the cost of resources needed to track the pallets. As well as needing an order large enough in size, the price per a pallet is also increased. The satellite tracking system is used much like GPS. A signal is sent to the pallets and then sent to the satellite giving us the ability to locate the pallets within feet of their current location.
The Internet and Customers
We intend to use the Internet to help inform our current customers where their order of pallets is located. If they are standard pallets then the customer can login using a name and password that was given to them to find if their load of pallets has been shipped to them, as well as to determine how many pallets are due back from them. The RFID allows for more information to be entered for the customers to see, such as what product is being shipped on the pallets and which warehouse the pallets are in. The satellite tracking gives the information that the RFID does as well as provide current status of product such as location on the interstate. How often the information is updated is pre set when the pallets are ordered.
The only drawback to manufacturing steel pallets is that a large number has to be produced before we can effectively service several different companies on a leasing basis. The steel pallets are very easy to lease to companies. The steel pallets are stronger than wood and plastic pallets (which mean less product loss due to broken pallets), the steel pallets have conformity, whereas most wood pallets do not, are more sanitary, and the steel pallets are as light as the average wood pallet.
The steel prices have actually fluctuated by a similar percentage as the wood prices. The fluctuating steel price actually has less of an effect over time on our leasing program. Since the average steel pallet has an expected life of 5 years, the steel pallet would pay for itself many times over.
APL STEEL PALLETS The need to eliminate the waste, cost, and inefficiency of wood pallets has been obvious for some time, and several companies have attempted to introduce alternative products in plastic, aluminum and steel. We believe that our steel and galvanized steel pallet will offer the following advantages over other products in the market:
o An APL steel pallet will be able to take on a static load of up to 65,000 pounds. Alternative materials like plastic and aluminum can hold about 20,000 pounds per load.
o Our steel pallets will be more environmentally friendly as they are reusable. Plastic and aluminum can be recycled, but because plastic or aluminum pallets are not as durable as steel, they must be recycled more often. While wood pallets can be recycled into wood particles, it is generally not feasible to do so. It is too dangerous to burn wood pieces from pallets made from hardwoods in wood stoves because they burn at temperatures that can warp or even melt residential wood stoves. Any pallets, especially those made from hardwoods, that are dumped in landfills can take 20 years or more to decompose.
o Our steel pallets last long enough to deliver enough repeated
18 uses to substantially lower average costs. The average steel pallet has an expected life of 5 years. Single or limited-use pallets are inherently more expensive than re-useable pallets. Reusable pallets made of steel can be substantially more cost effective over time than any other alternative.
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