After five years of international debate, packaging buyers are operating under new world trade rules that are changing the marketplace for wood-based pallets. The International Standards for Phytosanitary Measures No. 15 or ISPM No. 15, is a global guideline regulating wood packaging material in international trade. It was originally proposed in October 2001 by the European Union—and finally endorsed for February 2006 for global implementation by the Food and Agriculture Organization of the United Nations (www.fao.org).

The regulation requires verification that such wood packaging products as pallets, crates and dunnage (packing material for protecting cargo) have been heat treated or fumigated chemically with methyl bromide to kill off insects, or have been made in such a way that they are free of harmful pests or pathogens. Cargo from the U.S. to all other nations (except Canada) now has to be shipped with wood packaging materials that meet ISPM No. 15 guidelines.

"ISPM No.15 is a huge deal to this industry," says Jeff McBee, pallet market analyst at Pallet Enterprise magazine. "It is fueling a buying surge in hardwood, softwood and engineered lumber pallets. [Noncompliant] pallets are confiscated, destroyed and burned, and the shipping company gets the bill," says McBee.

The regulation is triggering a boom in treated wood packaging products, especially the engineered pallets made from oriented strand board, plywood and presswood, because shippers don't want to build two sets of pallet inventories to handle domestic and foreign shipments of their companies' products.

Litco International of Vienna, Ohio, (www.litco.com) upgraded its Inca-brand "International Gold" line of presswood pallets early on in advance of the ISPM regulation.

"These pallets are molded under high heat and pressure so they are clean and dry, odor-free, bug-free, mold- and bark-free, and nail-free—and have been approved for overseas shipping per ISPM 15 without additional and costly heat treatment," says Gary Sharon, commercial vice president.

Litco's presswood pallets also meet the environmental purchasing policies for federal, state and local governments because they are made from industrial and post-consumer wood waste. Sharon says the company's presswood are sold or leased in a wide variety of domestic and Euro sizes.