Ikea says, "paper, please"

IKEA, the Swedish homegoods and furniture retailer, is giving up wooden pallets in favor of paper platforms. The retailer reportedly uses 10 million pallets annually worldwide and expects to save 10 percent on transportation costs by making the switch.

"We don't know if the paper pallet will be the ultimate solution, but it's better than wood," Jeanette Skjelmose, sustainability manager at Ikea's supply chain unit, told Bloomberg News in November. Skjelmose said the corrugated-paperboard pallets are able to support a load of 1,650 pounds.

The pallets will only be usable for a single, one-way trip and then will be recycled. Because the paper versions are smaller and 90 percent lighter than their wooden predecessors, Ikea expects to save nearly $2 million annually by reducing the number of truckloads and containers it ships. But it will also have to spend nearly half that to purchase card stock and new forklifts, the retailer said.

Ikea is placing a big bet on paper pallets; wooden pallets will be gone from the company's system by January 2012. The question now: will the cost savings from one-way paper pallets outweigh the benefits of multiple-trip wooden pallets?

This is not the first time Ikea has tackled packaging. The company developed "loading ledges"—flexible platforms made from recyclable polypropylene plastic that expand and contract to the size of the load. It has also reduced packaging in order to fit more items on pallets and in trailers and containers.