USPS Lost Pallets and Trays Pose a Problem for Recyclers

Pallet recyclers must exercise caution when dealing with branded material

Plastic trays and pallets have been subject to theft
••• USPS

The U.S. Postal Service loses millions of dollars annually worth of mail equipment, including plastic pallets. In recent years it has reminded industry on a number of occasions to return them.

For example, the International Plastics Showcase, NPE 2015, presented an opportunity for USPS to broaden awareness about their losses of plastic pallets and trays. The theme of their effort, aimed at plastics recyclers and processors, was entitled. “Got It. Return It." 

USPS has cautioned that the wrongful use or destruction of postal property is a federal crime. Three years of jail time and fines can be the result of anyone convicted. USPS also recently released a video of a sting operation involving a postal truck driver. It is worth noting that USPS does not employ a pallet deposit system, which would likely help curb the loass.

In 2013, USPS apprehended a postal truck driver, who had stolen over 40,000 postal pallets, valued at $1.7 million. He sold them for $1 each.

You Could Get Arrested or Prosecuted

Possession of proprietary pallets and containers can have serious consequences for recyclers. Scrap theft, in this case, the theft or misuse of postal property is a federal crime that carries a penalty of up to three years imprisonment or a fine of up to $250,000. The Postal Service says that it has successfully prosecuted in a number of cases. It notes that:

  • Postal Inspectors have recovered more than $4 million in MTE since it began its Equipment Recovery Project in 2008, with prosecutions to firms ranging from New England fish markets to California recyclers.
  • Prosecution is pending in a current investigation where Postal Inspectors found approximately 7,500 pallets, valued at over $200,000, at a California recycling company.
  • A Georgia man who worked for a large printing company was arrested for stealing and selling almost 10,000 postal pallets to a pallet company which in turn sold them to a freight company shipping to South America. The man paid $10,129 in restitution to the Postal Service.

What Does This Mean for Pallet Recyclers

When recyclers end up in possession of proprietary pallets and containers, they leave themselves open to legal action. It goes without saying, a pallet recycler should not knowingly accept proprietary materials. But in a full load of incoming mixed pallets, the proprietary items may not be easily identifiable. As such, the recycler may end up with USPS or other proprietary pallets in the course of doing business.

Over the last several years, this scenario has played out in the legal system where pallet rental companies, most notably CHEP, have used the legal system to assist in the recovery of their pallets from recyclers. Pallet recyclers, in turn, have sued pallet owners for fair compensation for handling these pallets that have inadvertently ended up in their yards after having been lost.

The courts have determined that fair compensation is reasonable. Recyclers have successfully argued that asset owners receive “unjust enrichment” if recyclers have to spend resources to process and accumulate stray pallets, only to have the owner recover them without paying compensation for recovery. On the other hand, where recyclers knowingly accumulate with the intent to sell proprietary material in the marketplace rather than attempting to contact the owner, then they are at risk of prosecution.​

Given the fragile state of US Postal Service financially, it is hard to envision reasonable compensation for return. It is a case where a very attractive payback for USPS should be possible through better attention to asset management. For recyclers, it is almost always a better proposition that supposedly closed loop systems such as USPS effectively manage their assets rather than them ending up in their facilities.